Theft by Consent Alabama Lottery

An Alabama Lottery:
Theft By Consent
Founding Principles In Action

Executive Summary
Lotteries are the most popular form of gambling in America. As recently as 1963, lotteries
were banned in every state in America. Today, however, 38 states and the District of Columbia
have legalized state-run lotteries.
Americans have spent more than $427 billion on lottery tickets—or about $375 every
second—since their legalization in 1964. In 2001 alone, Americans wagered more than $38.9
billion on lotteries—about $136 for every man, woman and child in the nation.
Lotteries are also the biggest source of government revenue from gambling, generating about
$11.8 billion for the states sponsoring them. In most states with lotteries, some or all of this
revenue is earmarked for education.
This lure of “revenue from nowhere” has caught the attention of Alabama politicians since
1986. For the second time in four years, the citizens of Alabama are being told the best way to
boost the quality of education in our state is by legalizing a state-sponsored lottery. The most
recent proposal by Gov. Don Siegelman would establish a state lottery that he states could
generate $200 million in revenues for the state’s beleaguered Education Trust Fund.
With the recurring threat of proration and the lure of lotteries and casino gambling across
three of our state lines, an Alabama lottery may seem to be a quick fix to our state’s financial
woes. Despite their popularity, though, lotteries are not the stable revenue source gambling
supporters claim them to be, nor are they devoid of social and economic consequences. An
Alabama Lottery: Theft by Consent examines the darker side of lotteries in other states, as well
as what might happen if Alabama were to legalize its own education lottery. This report shows:
! To realize $200 million for education, an Alabama lottery would have to sell $571 million
worth of tickets, or about $127 for every man, woman and child in the state.
! Legalizing a state lottery would create more than 16,000 new pathological gamblers, and cost
the state more than $200 million in social and economic costs.
! The poor spend disproportionately more of their income on lottery tickets than middle- and
upper-income families.
! Instead of attracting money from out of state, an Alabama lottery would cannibalize the
existing economy by consuming local dollars.
! States that legalize low-stakes forms of gambling such as lotteries often legalize “harder”
forms of gambling in a matter of a few years.
! Seventy-five percent of all high school students have gambled, and more than 2.2 million
adolescents are already addicted to gambling.
! Five percent of all lottery players buy half of all lottery tickets.
! The fastest growing group of problem gamblers—in terms of those calling for help—is
senior citizens, many of whom are being hooked on the lottery.
! Alabama residents buy only two percent of all lottery tickets from Florida and 4.5 percent
from Georgia.
The Alabama Policy Institute (API) is an independent, non-profit research and education organiza-
tion that is issue centered and solution oriented. We provide in-depth research and analysis of
Alabama’s public policy issues to impact policy decisions and deepen Alabama citizens’ understand-
ing of, and appreciation for, sound economic, social and governing principles.
Since 1989, API has been on the front lines of critical public debates, helping Alabama citizens, law-
makers and business leaders better understand and apply principles that maximize individual freedom,
limit government interference and encourage personal responsibility. The Alabama Policy Institute is
the largest free-market, solution-based policy research center in Alabama.
Alabama’s Lottery: Theft By Consent

by Dr. John R. Hill
Layout, Design, and Editing by Kristin Day
Copyright August 2002 by the Alabama Policy Institute, Birmingham, Alabama
Permission to reprint in whole or in part is hereby granted, provided that the

Alabama Policy Institute and the author are properly cited.
For additional copies, please contact:

Alabama Policy Institute
P.O. Box 59468
Birmingham, AL 35259
(205) 870-9900
info@alabamapolicy.org
An Alabama Lottery: Alabama Policy Institute
Theft By Consent
otteries are the most-played form of legalized gambling in the U.S.
L In 1998, 51.8 percent of Americans—100 million adults—played

the lottery, compared to 29 percent who gambled at casinos and
seven percent who wagered on horse races.1 Americans have spent more
than $427 billion on lottery tickets, or about $375 every second, since their
legalization in 1964.2 In FY 2001, Americans wagered $38.9 billion on
lotteries—about $136 for every man, woman and child in the nation.3
While state lotteries have the worst odds of any common form of gambling
(the odds of winning the typical state lottery are about one in 12-14 million,
and are getting higher),4 they also offer the largest payoffs, with prizes
regularly totaling tens—and occasionally hundreds—of millions of dol-
lars.5
Lotteries are also the biggest source of government revenue from gam-
bling, having generated approximately $151 billion for the states sponsor-
In 2001, Americans
ing them since their legalization in 1964.6 In FY 2001 alone, lotteries con- wagered $38.9
tributed $11.8 billion—about 35 percent of money wagered—into state cof- billion on lotteries—
fers.7 They are also the only form of gambling in the U.S. that is a virtu- about $136 for every
al government monopoly.8 man.
As recently as 1963, lotteries were banned in every state in America.9

Today, 38 states and the District of Columbia have legalized government-
run lotteries.10 Their revenues fund a variety of initiatives, including edu-
cation, economic development, transportation, prison construction, envi-
ronment and natural resources programs, and senior citizens centers.11 In
almost every case, the lottery was presented to state legislators as a means
of raising revenues without having to raise taxes.12
The lure of "revenue from nowhere" that accompanies the effort to

legalize lotteries has caught the attention of politicians in Alabama since
1986. The most recent proposal would establish a state lottery and earmark
all profits to the state's Education Trust Fund. Unlike several earlier
attempts to establish a Georgia-style education lottery to fund college
scholarships, voluntary kindergarten programs and technology upgrades in
public schools, Alabama's latest lottery proposal would be directly tied to
the state's education budget. As with the last proposal, lottery supporters
expect their program could generate about $150-200 million for education
per year.13
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Alabama Policy Institute An Alabama Lottery:
Theft By Consent
But, a study produced by Dr. Mark Thornton, Professor of Economics

at Columbus State University and former Alabama Assistant
Superintendent of Banking, suggests the state is too poor and does not have
a population large enough to sustain a lottery that nets more than $72 mil-
lion a year.14 Some gambling analysts also estimate the social price
Alabama will pay if it legalizes a lottery may be higher than any benefits it
might receive.
Whose predictions are more accurate? This report examines other state
lotteries to determine the social and economic consequences of introducing
a lottery in Alabama.
I. The Lottery and Education

Just because a lottery claims its funds go to education does not neces-
"every dollar given to sarily mean that a state's public schools are receiving additional funding
a school district from lottery profits.15 Ironically, states without lotteries actually maintain
through the lottery and increase their education spending more than states with lotteries.16 A
formula is literally 1997 study of the impact of lotteries on education funding concluded:
deducted from the "regardless of when or where the lottery operated, education spending
amount that district declined once a state put a lottery into effect." Consider the following
would have received examples:
under school aid for-
mulas," !In 1988, the first year of its lottery, Florida spent 60 percent of its budg-
et on education. By 1993, however, education's share of the budget had
—New York State dropped to 51 percent.17 Last year, Florida's lawmakers considered such
Comptroller varied measures as increasing property taxes and installing video poker
H. Carl McCall machines at dog and horse tracks to pay for education and human servic-
es.18
!In 1998, New York State Comptroller H. Carl McCall called the lottery's
long-standing claim that its revenues go to education "a myth." A state
audit found "every dollar given to a school district through the lottery for-
mula is literally deducted from the amount that district would have
received under school aid formulas," freeing up more of the state's general
fund for other spending.19
In reality, the billions of lottery dollars earmarked for education do not

amount to much. According to a 1999 Education Research Service report,
lottery contributions constitute less than four percent of state and local edu-
cation budgets in the states that assign their lottery revenues to education.20
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Theft By Consent
Thus, instead of helping, lotteries can hurt education funding in the

long run because they serve to undermine public support, even in Alabama
where tax dollars are earmarked for education. When voters cast their
votes regarding millages, school board referenda, or sales tax increases for
education, they are increasingly saying "no" because voters believe schools
are being amply funded with gambling money. In states with education lot-
teries this should come as little surprise because the public was led to
believe that additional funds for education would not be needed. When
Susan MacManus, a University of South Florida political scientist, asked
local voters why they had voted against a sales tax increase for local
schools, more than 80 percent of them gave the same reason: the lottery.21
Consequently, the revenue that Alabama's schools would receive from a
lottery would very likely make it even more difficult to convince voters to
approve tax increases.
The experiences of
II. The Lottery-Casino Connection
other states show the
The main obstacle to the introduction of many forms of casino gam-
presence of a lottery
bling22 in Alabama is a provision in the state's constitution specifically
is a strong predictor
prohibiting lotteries. This provision has become a blanket prohibition on
of whether a state
most forms of gambling because the courts have interpreted it as a prohi-
legalizes casinos
bition on all games of "chance." However, the Alabama Constitution does
not explicitly prohibit other forms of gambling besides a lottery or gift
enterprise. Only court opinions have made this provision into a blanket
prohibition on most forms of gambling.
The experiences of other states show the presence of a lottery is a

strong predictor of whether a state legalizes casinos. According to research
by political science professor Patrick Pierce of St. Mary's College, the pres-
ence of a state lottery is a stronger predictor of whether a state legalizes
casinos than the fiscal health of the state, the political party in power, the
timing of the electoral cycle, citizens' religious fundamentalism, and the
adoption of casinos by neighboring states.23 In fact, 15 of the 18 states
with both lotteries and casinos—83 percent—legalized a lottery first. After
these 15 states legalized a lottery, the legalization of casinos took an aver-
age of less than eight years.24
For many states that adopt low-stakes legalized gambling activities

such as a state lottery, the progression to "harder" forms of gambling is
swift. Indiana typifies this transformation. After legalizing a lottery in
1989, the state's lawmakers legalized riverboat casinos in their 1993-1995
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Theft By Consent
budget to avoid raising taxes. Last year, Republicans in the Senate blocked
legislation to expand gambling, yet they were lobbied hard to ease board-
ing restrictions by allowing riverboats to remain docked. The Democratic-
controlled House also tried—unsuccessfully—to legalize casino barges and
video gambling at horse-racing venues.25
In South Dakota, the transformation was even faster. In 1987, a state

lottery was established26; by late 1989, the city of Deadwood initiated
land-based casino gambling, which was followed by casino gambling on
Indian reservations in 1990; and by 1991, video-machine gambling was
available throughout the state.27 There is no reason to believe the same
thing would not happen to Alabama if the state legalized the lottery.
III. The Lottery and Economics

A dollar spent on a
lottery ticket in A. Where the Money Goes
Florida, Georgia or A dollar spent on a lottery ticket in Florida, Georgia or anywhere else
anywhere else does does not equal a dollar devoted to education. Instead, about 52 cents of
not equal a dollar each dollar is given back to gambling patrons in the form of prizes, and
devoted to education. about 12-17 cents are used to cover administrative and retailing expenses.
The remainder—about 31 cents per dollar in FY 2001—is then earmarked
for the program or programs the lottery is obligated to fund.28 Thus, to
generate $200 million for education, an Alabama Education Lottery would
have to sell about $645 million worth of tickets annually, or about $144
worth of tickets bought by each resident of the state.29
B. The Lottery and Interstate Gambling

Claiming that "Alabama already has a lottery" that Alabamians do not
benefit from, gambling supporters contend that Alabama must expand
gambling opportunities to reduce the number of local dollars being spent
on state-sponsored lotteries in Florida and Georgia, and in Mississippi casi-
nos. Despite its proximity to these popular gambling destinations, though,
only a small percentage of patrons at these sites come from Alabama.
Because no state lottery keeps records of lottery players or their

addresses, accurate calculations of interstate lottery ticket purchases are
impossible. The best estimate of interstate lottery play comes from the
Internal Revenue Service, which requires lotteries to report winners of
prizes worth $600 or more. In Georgia, for example, IRS records from
1993-1997 suggest that Alabama residents buy only 4.5 percent of the state
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Theft By Consent
lottery's tickets.30 That translates into about $104 million of the $2.3 bil-
lion worth of tickets sold in Georgia in fiscal year 2000.31
Alabamians spend even less on the Florida Lottery. From 1997 to

2000, Alabama residents bought only about 1.97 percent of the lottery tick-
ets sold in Florida, or about $43.8 million worth of tickets per calendar
year.
Likewise, Alabamians comprise a relatively small percentage of

patrons to Mississippi's state-regulated casinos. According to the most
recent quarterly survey data from the Mississippi Gaming Commission,
only about 8.4 percent of all visitors to Mississippi's casinos come from
Alabama. This is lower than patronage from Mississippi (32.3 percent)
and its sister states: Arkansas (9.3 percent), Tennessee (10.4 percent) and
Louisiana (10.4 percent).32
If spending patterns among patrons are assumed to be equal, it is prob-

able that only about $60.2 million of the $714.8 million in revenue col-
lected in Mississippi's casinos during the latest three-month period came
from Alabama, or about $51 per patron per visit.33 Even if Mississippi
casino revenue exceeds $2.8 billion for calendar year 2002, Alabama's con-
tribution would probably be no more than $236 million. This estimate is
significantly lower than claims made by gambling supporters several years
ago that Alabamians were spending $300 million annually at Mississippi's
12 Gulf Coast casinos alone.
The Commission's figures do not include revenues from the Choctaw-

owned Silver Star Casino in Philadelphia, which, with more than 3,100 slot
machines and 2,300 employees, is the second-largest casino in
Mississippi.34 While Indian casinos are not required to disclose their earn-
ings, it is unlikely that Silver Star patrons from Alabama add more than 10-
15 percent to that casino's annual revenue.
If gambling supporters are concerned about retaining some of the mil-

lions of dollars passing in and out of Alabama on a daily basis because of
interstate commerce, attention would be better focused on neighboring
states without casinos or lotteries. For example, less than three percent of
Arkansas' travel and tourism revenue comes from visitors from Alabama,
yet Alabama residents spent $60.1 million in Arkansas in 1995.35
According to the Travel Industry Association of America, Alabama tourists
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Theft By Consent
spent $648 million in Tennessee alone in 1995—the year the most recent
data is available—almost three times the amount spent on gambling in
Mississippi's casinos.36 If the pro-gambling lobby is concerned about
other states bleeding money away from Alabama, they would do better to
work at duplicating the family-oriented, non-gambling tourist attractions in
Tennessee and Arkansas than to try to duplicate the socially destructive
gambling attractions of Mississippi.
C. The Lottery as a Long-Term Revenue Generator

The millions of dollars supposedly to be generated by a lottery for
Alabama's coffers assumes that demand for a lottery can sustain itself. It
probably can't. Since the costs of operating a lottery are initially fixed,
states with smaller populations (like Alabama) must surrender a larger por-
tion of lottery revenue to administrative costs.37 According to data from
If the pro-gambling LaFleur's Lottery World, a lottery trade magazine, eight of the 10 states
lobby is concerned with the highest lottery profit margins in FY 2000 had populations of more
about other states than 10 million. On the other hand, six of the 10 states with the lowest
bleeding money away profit margins had populations of less than two million.38 University of
from Alabama, they Mississippi researcher Donald Moak notes: "For rural, Southern states,
would do better to plans to use lotteries to alleviate severe budgetary shortfalls are hardly
work at duplicating worth it…Southern states are not urbanized enough to support lotteries.
the family-oriented, That…translates into much higher operating costs which make lotteries
non-gambling tourist economically questionable at best."39 Alabama's per-capita income is also
attractions in significantly lower than the national average, allowing fewer dollars to be
Tennessee and played on the lottery, according to Auburn economist Daniel Gropper.40
Arkansas than to try
to duplicate the While the introduction of a state lottery may initially produce millions
socially destructive of dollars in revenues for education, long-term revenue opportunities are
gambling attractions poor. According to Dr. Robert Goodman, an economics professor at
of Mississippi. Hampshire College and author of The Luck Business, it takes about three
to five years for gambling interests to drain the existing consumer base.41
However, because Alabama's per-capita income is significantly lower than
the national average and the state lacks large, dense urban centers, the lot-
tery could drain local assets at a much faster rate.
Clearly, it is local assets that will be devoured. With more than 100
casinos along the Mississippi River within a day's drive for tens of millions
of people, and state-sponsored lotteries in Georgia and Florida, there would
be little reason for tourists to come to Alabama to gamble.42 Moreover, if
the lottery were legalized to keep Alabamians from gambling in Florida,
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Theft By Consent
Georgia, or Mississippi, it is an admission that it is Alabamians the gam-

bling interests want to prey upon.
The short-lived infusion of lottery dollars almost always results in prof-

ligate spending, which, in turn, forces legislators to raise taxes in order to
shore up the budgetary shortfalls that develop when lottery revenue sags.
According to a study by Money magazine, taxes in states with lotteries
grew three times faster from 1990 to 1995 than in states without lotteries.
In 1971, Governor Thomas Meskill of Connecticut successfully lobbied for
a lottery by arguing, "Giving people the choice to raise money purchasing
lottery tickets will let your state hold the line on taxes." In 1991, however,
Connecticut legislators enacted the state's first income tax even though lot-
tery sales had reached $671 million the previous year.43
1. Little Room for Growth

The short-lived infu-
As the number of states sponsoring lotteries and other forms of gam-
sion of lottery dollars
bling has grown, the percentage of profits netted by state governments has
almost always results
declined. In 1970, so few lotteries existed that their sponsoring states
in profligate spend-
received an average of 43 cents for every dollar wagered on the lottery. By
ing, which, in turn,
2001, the average had fallen to around 30 cents.44 Suddenly buying a lot-
forces legislators to
tery ticket is not nearly as novel as playing a video poker terminal at a race-
raise taxes in order
track or a slot machine at the local casino.45 Lottery directors themselves
to shore up the budg-
admit that the gambling market is saturated:
etary shortfalls that
develop when lottery
!Buddy Roogow, director of the Maryland Lottery, notes: "I'm worried that
revenue sags.
the megajackpot opportunities that have been made available recently in
the long run only steal the enthusiasm that people have for traditional lot-
tery games. I am very, very concerned about this. Jackpot fatigue is a real
malady."46
!Chris Lyons, director of the Oregon Lottery, notes: "There is no question

that players have more choices in today's gaming marketplace, and state
lotteries have to be more attuned to those players than ever before. We're
no longer the only game in town, and we're certainly not the newest."47
2. Slow Growth
Although lottery ticket sales have steadily increased every year since at
least 1970, the rate of recent growth has slowed dramatically since the
1980s, when 20- and 30-percent growth rates were common. Indeed, lot-
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Theft By Consent
tery sales for 2001 increased only 3.2 percent over 2000.48
In response to fading sales, lotteries have increased the number and

variety of both traditional and nontraditional games. "Eventually, you
reach a point where you diversify as much as you can and you have to seek
alternatives. Or you can stay put and lose sales and profits," says David
Gale, executive director of the National Association of State and
Provincial Lotteries.49
To keep interest up, most lotteries run dozens of games at a time, con-
stantly debuting new game variations while retiring older ones. New
Hampshire, for example, debuted 49 instant games during the 2000-2001
fiscal year.50
In 2001 the Ohio
In Georgia, which has been billed as having the most successful lot-
Lottery earned the
tery in the country, declining ticket sales prompted the introduction of new
dubious honor of
games both to lure new players and to squeeze more dollars from existing
having the largest
ones. Today, Georgia routinely runs more than 35 instant ticket games at
decline in sales in the
any time—some costing $10 per play—as well as seven on-line, or com-
nation: 10.7 percent,
puterized, games such as Fantasy 5, Mega Millions, Quick Cash, and
or about $230.5
Lotto South.51 Thanks to these new games, ticket sales remained high,
million less than the
yet the net proceeds to the state fell below the required 35 percent. The
year before. The
shortfall was blamed on the new games' larger payouts. To remedy this
shortfall left the
situation, the Georgia Lottery simply reduced payouts. The strategy, how-
state's schools with
ever, backfired, driving players away.52
$52 million short of
the $664 million it
3. Lotteries in Decline
was supposed to
Some lotteries are actually experiencing significant drops in ticket
raise, forcing the
sales. From 2000 to 2001, ticket sales declined in 15 states.53 The fol-
state to dip into
lowing examples typify how traditional lottery games are losing popular-
reserves and tap its
ity in many states:
pool of uncollected
prize money.
!One of the oldest lotteries in the nation, Ohio started its lottery in 1974
with upbeat predictions of being a steady source of money for public edu-
cation. In 2001 the Ohio Lottery earned the dubious honor of having the
largest decline in sales in the nation: 10.7 percent, or about $230.5 million
less than the year before. The shortfall left the state's schools with $52
million short of the $664 million it was supposed to raise, forcing the state
to dip into reserves and tap its pool of uncollected prize money.54
!While Oregon's gross lottery sales increased 4.5 percent from 1997 to
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Theft By Consent
2000, the state's profit margin dropped three percent during the same peri-
od, resulting in approximately $8.4 million less for the state than three
years earlier. According to recent research by the Oregon Gambling
Addiction Treatment Foundation, this may be because past year gambling
participation in both traditional lottery games and lottery-sponsored video
poker have both fallen 21 percent and 14 percent, respectively. With more
than a dozen different venues of gambling available in and around Oregon,
the state is saturated with gambling. Only Internet gambling is showing
any signs of growth.55
!In Washington state, scratch ticket sales worth about $250 million a year
have begun to flatten out. And a recent state study showed that retailers
within 10 miles of casinos with slots sold seven percent fewer lottery tick-
ets than expected.56
Lottery ticket sales in
!Competition from three new casinos in Detroit has sapped $154 million
Wisconsin have
of gambling dollars from the Michigan Lottery since 1999. In 2001, pro-
dropped 23 percent—
ceeds to the state's School Aid Fund dropped five percent—$31.5 million—
$117.5 million—over
forcing the lottery to add more drawings, attempt to build bigger jackpots
the past seven years
and introduce more varied instant games.57
and show no sign of
picking up.
!Despite a surge in sales in FY 2002, the Illinois Lottery has yet to recov-
er to its peak of $1.6 billion in 1996. From 1997 to 2001, sales sagged by
more than $188.3 million. As a result, Illinois schools received almost $50
million less in 2002 than they did six years ago.58
!Lottery ticket sales in Wisconsin have dropped 23 percent—$117.5 mil-

lion—over the past seven years and show no sign of picking up.59 The
slide in sales is being attributed to increased competition from Indian casi-
nos and a natural decline in interest in the game. "The lottery's sales curve
is no different than buggy whips or toasters or anything else," says Todd
Berry, executive director of the Wisconsin Taxpayers Association. "New
products are tried because people are curious about them. But then they
start to get boring and old, and sales start to fall off."60
!In Texas, lottery ticket sales in Texas are down from $3.7 billion in 1997
to $2.8 billion in 2001, a 24.5 percent drop in revenues. Likewise, Texas'
Foundation School Fund—to which all lottery profits are earmarked—real-
ized $324 million less from the lottery in 2001 than in 1997. Interestingly,
as lottery sales have begun to recover, the amount of revenue to schools has
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Theft By Consent
actually declined by $100 million from 1999 to 2001.61
Another reason lottery ticket sales have slowed is because gamblers are
moving toward games offering better chances of winning and greater con-
venience. While lotteries typically pay back about 55 cents on the dollar
in prizes, slot machines and other table games such as blackjack return at
least 95 cents per dollar risked. According to State Policy Reports, "cus-
tomers are gravitating toward the forms of gambling which give them the
best deal."62
As for convenience, the pervasiveness of mobile Internet-enabled

devices such as cell phones and interactive television is bringing the entire
menu of gambling products into the home, superseding the handiness of
the Seven-Eleven lottery ticket purchase. Despite the fact that it continues
to be illegal to gamble over the Internet, consumers are enthusiastically
embracing these new gambling venues. Gross revenues from Internet gam-
bling increased 89.1 percent from 1999 to 2000, and expenditures are
expected to rise to $6.4 billion—almost 10 percent of gambling wagers—
by 2003.63
4. New Games and More Gambling

Some of the biggest contributors to lottery sales in the past decade have
not been traditional lottery games at all, but keno and video lottery termi-
nals (VLTs). Between 1999 and 2000, VLT gross gambling revenues grew
by 18.6 percent, compared to only four percent for traditional lottery
games.64 VLTs, which were available in only five states in 2000, were
responsible for $1.6 billion in gross gambling revenues—9.6 percent of all
lottery revenues—or about $212 per capita in their home states.65
Keno and VLTs are popular because they offer faster play than all lot-
tery games except scratch-off tickets. They also have higher prize payouts,
often exceeding 70 cents for every dollar's worth of lottery tickets sold.66
The fast pace of these games can generate more sales, yet states that
depend too heavily on these games may see their profit margin shrink as a
result of higher payouts.
Adding VLTs to a state lottery's game mix, though, also carries a social
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cost, and the gambling industry knows it. Eugene M. Christiansen, chair-
man of Christiansen Capital Advisors, LLC, notes:
Lotteries, racetracks and other pari-mutuel businesses might tap

remaining pools of unsatisfied demand for machine gaming by seeking per-
mission to add slot machines or VLTs to their operations. This works; it
also increases social friction by making a demonstrably dangerous form of
gambling more widely available. This is more of a problem with VLTs,
with their neighborhood deployment, than it is for racetracks, which tend
to be situated away from population centers.67
Another reason the lottery industry posted an overall profit for 2001
was Powerball, the nation's largest multistate lottery, with 21 states partic-
ipating.68 Powerball sales totaled approximately $1.06 billion in 2001,
and were enough to make the difference between increased and lost lottery
In order for lotteries
sales for eight states.
to survive, they must
cannibalize the
By lowering the odds of winning, Powerball executives have actually
economy, encourag-
increased ticket sales. In 1997, Powerball lowered the odds of winning its
ing people to gamble
jackpot from one in 55 million to one in 80 million. Sales accelerated as
money they otherwise
jackpots went unclaimed and rolled over into larger and larger prizes.69
would have spent at
This past July, Powerball announced it will again increase the odds of hit-
pre-existing
ting the Powerball jackpot to one in 120 million to make jackpots in excess
businesses in the
of $100 million more likely.70
marketplace,
including those
B. Predatory Economics
selling lottery tickets.
Several studies have been conducted by the gambling industry to sup-
port their claims that gambling improves a state's economy. These claims
were examined in a 1994 report by the Center for Economic Development
at the University of Massachusetts. The report, which analyzed 14 indus-
try studies, concluded that legalized gambling operations—including lot-
teries—are scavenger industries, only serving to transfer wealth from the
many to the few. 71
In order for lotteries to survive, they must cannibalize the economy,

encouraging people to gamble money they otherwise would have spent at
pre-existing businesses in the marketplace, including those selling lottery
tickets.72 Sooner or later, this massive diversion of revenue results in lost
business and closures. In Louisiana, for example, "City Newstand, the
business that ceremoniously ushered in the big-jackpot games with a brass
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band, LSU cheerleaders and a host of state dignitaries, recently got out of
the Lotto business entirely. Even though the store got five cents for each
$1 ticket, the money didn't make up for the lost business on other items,
said the owner."73
Storeowners in California have also experienced a decrease in food

sales equivalent to the revenue gained from lottery ticket sales. According
to a survey of 1,200 stores taken by the California Grocers Association,
two-thirds reported an average decline in food sales of seven percent since
the beginning of the California lottery.74 At least one chain of grocery
stores, Holiday Quality Food Stores of California, has ceased the sale of
lottery tickets. Jerry Neilsen, general manager of the chain, said his "stores
had experienced a 10 percent decline in profits since they began selling
tickets. Though they had sold more than $1 million in lottery tickets since
it began, food sales had declined by a similar amount."75
If lottery revenues were immediately reintroduced into the economy,

the negative economic effects of the game would be substantially reduced.
Sadly, the boom-and-bust nature of lottery economics never allows this to
happen. After prize money is awarded and the local government receives
its share of revenue, the remaining funds are pocketed by the administra-
tors of the lottery. Rather than being invested in capital or spent on con-
sumer items, lottery promoters "reinvest" their dollars in newer forms of
gambling in order to maintain the thrill of the game.76 These costs also
rise faster than other methods of revenue collection because immense
amounts of cash must be spent on advertising to sustain the public's inter-
est in playing.77 As professor Jack Van Der Slik notes, "[state-sanctioned]
gambling produces no product, no new wealth, and so it makes no genuine
contribution to economic development."78
Likewise, William Duncombe, associate professor of public adminis-

tration at Syracuse University's Maxwell School of Citizenship and Public
Affairs, adds, "In the world of public finance…the lottery is the one source
of revenue that does poorly on almost every criteria of evaluation."79
IV. The Lottery and Its Victims

Gambling proponents contend that people spend only their disposable
"entertainment" funds on gambling. Playing the lottery is thus made to
appear as a "voluntary tax" that provides funds while you are doing it.80 In
reality, those hardest hit by lottery losses are those who can least afford it:
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the poor, minorities, underage gamblers and senior citizens.
A. The Poor
Although people from all income levels gamble, the poor are most
adversely affected because they cannot afford even a small loss. Whereas
the affluent tend to view the lottery as entertainment and as a source for
increased spending on products and services important to higher-income
households, the poor see it as a way to escape the drudgery of uninterest-
ing, routine work and improve their living standards.81
"As your income goes down, you tend to see the lottery as an invest-
ment," says Robert Goodman, director of the United States Gambling
Research Institute.82 "For the poor, the lottery is not harmless entertain-
ment," says Dr. J. Emmett Henderson, head of the Georgia Council on
Moral and Civic Concerns. "It is a desperate but vain attempt to survive.
Because lotteries are
But the odds of winning are so cruel that the lottery turns out to be theft by
regressive—that is,
consent."83
low-income house-
holds spend a larger
Because lotteries are regressive—that is, low-income households spend
percentage of their
a larger percentage of their income on lotteries than families with more
income on lotteries
wealth—they devour what little "discretionary" income they have, money
than families with
that could be saved or spent on better food and clothing. Lottery propo-
more wealth—they
nents have tried to dismiss the allegation that lotteries are regressive by not-
devour what little
ing that low-income households spend proportionately more on every item
"discretionary"
with a fixed price than wealthier households. "After all, $200 a week takes
income they have,
up a greater percentage of $10,000 than it does of $100,000. In fact, other
money that could be
state-imposed measures, such as the sales tax and the gas tax, are also
saved or spent on
regressive. In many cases those in lower income brackets pay more than
better food and
20 percent of their income for such taxes, while those in high income
clothing.
brackets pay only about five percent."84
The response of lottery supporters regarding regressivity is not con-

vincing, though, for at least three reasons. First, "it avoids the fact that lot-
teries are a greater burden to the poor than other economic classes. The
fact that other sources of revenue may do the same is irrelevant."85
Second, Alabama's overall tax code already unfairly burdens the poor.
A 2001 report by the Public Affairs Research Council of Alabama found
"the state and local tax burden [as a percentage of income] is somewhat
larger for low-income families than for high-income families."86
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Similarly, the Center on Budget and Policy Priorities has repeatedly cited
Alabama as one of only nine states that taxes the income of "very poor
families," an indication of regressivity. Out of 42 states that tax income,
Alabama had the lowest threshold for taxing income ($4,600 in 2001).87
Alabama's poor cannot afford another regressive tax, even if it is "volun-
tary."
Finally, the poor spend more on lottery tickets on an absolute scale.

Even if an equal number of gamblers came from all income classes, the 39
million gamblers who live below the poverty line who gamble would still
be unable to afford it.88 Yet, years of research on where tickets are sold
strongly suggests the poor are more likely to play the lottery than other
income groups:
In Maryland, almost !Gamblers with household incomes of less than $10,000 bet nearly three
half—47 percent—of times as much on lotteries as those with incomes over $50,000, according
the state's heavy to the National Gambling Impact Study Commission (NGISC).89
players come from
households earning !A 1998 survey conducted by Georgia State University found that fami-
less than $20,000 a lies in Georgia earning less than $25,000 per year spend two to three times
year. An almost as much on the lottery as a percentage of their income than households
equal number—48 earning $50,000 or more.90 Other research by the University of Georgia
percent—have a high found that, in Georgia's 10 poorest counties, the lottery sold an average of
school diploma or $218 worth of tickets for every man, woman and child in 1997. In the 10
less. wealthiest counties, however, per-person lottery ticket sales averaged only
$177. When per-capita income is considered, Georgia's poorest residents
spent more than twice as much of their annual income on the lottery than
those living in wealthier counties.91
!In Indiana, research by the Indianapolis Star found that household spend-
ing on lottery tickets averaged $53 for every $10,000 of mortgage wealth
in the poorest counties of the state, while the wealthiest counties spent
only $8 per $10,000 of mortgage wealth.92
!In Maryland, almost half—47 percent—of the state's heavy players come
from households earning less than $20,000 a year. An almost equal num-
ber—48 percent—have a high school diploma or less.93
!In Massachusetts, individuals in the poorer cities of Worcester and
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Chelsea spent an average of $336 and $445, respectively, on lottery tickets

in the early 1990s, while wealthier towns such as Weston and Amherst
spent an average of $30 and $42 per capita, respectively.94
Another common method of inferring whether members of particular

income groups play the lottery is counting ticket sales and lottery outlets
in a given county or ZIP Code area:
!Research recently published the Cincinnati Enquirer found that sales of

Ohio Lottery tickets are the briskest in areas of the state where people earn
less. Specifically, more than 62 percent of the lottery's sales in FY 2000
came from neighborhoods where annual household incomes fell at or
below the statewide median of $38,970. Likewise, more than 61 percent
of the 10,146 businesses that sold lottery tickets in 2000 were in lower-
income neighborhoods. Finally, a ZIP Code analysis of winners of more
In Maine, low-income
than $1,000 found that winners in the poorest neighborhoods outnumbered
residents tend to be
those in the richest neighborhoods by a margin of two-to-one.95
the biggest lottery
ticket buyers, accord-
!In Maine, low-income residents tend to be the biggest lottery ticket buy-
ing to an Associated
ers, according to an Associated Press analysis of lottery sales and census
Press analysis of
figures. In 1997, for example, Cumberland County residents made the
lottery sales and
most money per household in the state—$41,393—yet they spent the least
census figures.
per capita: $121 per year. Conversely, Washington County residents had
the smallest median household incomes—$25,673—yet they spent $198
per year on the lottery, the highest county average for Maine and 33 per-
cent higher than the state average of $149.96
!Seventy-nine percent of the money spent on lottery tickets in 1997 in

Lexington, Kentucky was spent in ZIP codes where residents' per capita
income was below the county average of $20,274. Research by the
Lexington Herald-Leader found that spending on lottery tickets in north
Lexington's 40405 ZIP code in 1997 was $259 per person. But in 40502,
an area where per capita income is more than twice as high, lottery spend-
ing was only $78 per person. The average amount spent per person on the
lottery was $131. Of the five counties reporting higher-than-average
spending on lottery tickets, all had below-average income.97
!In Georgia, the poor who live in predominantly urban areas spend far
more of their income on lottery tickets than wealthier counties. According
to a study conducted by the Atlanta Journal-Constitution, ticket sales dur-
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ing the first year of Georgia's lottery were highest in neighborhoods with
the lowest income levels and the highest proportion of minority residents.
In ZIP codes with average household incomes below $20,000, the lottery
sold $249 worth of tickets per resident, compared with $97 in ZIP codes
with incomes exceeding $40,000.98
!In 1997, the Washington Post compared lottery ticket sales in Washington
D.C., by ZIP code. They found that, as the median household income in a
ZIP code declines, ticket sales significantly increase.99
B. The Lottery: Choice of the Poorest Gamblers

Many lottery players are not poor, yet less-educated, low-income play-
ers participate at a rate higher than their percentage in the population.
Spending on lottery tickets sharply declines as players' education increas-
In Wisconsin, an es, according to Duke University public policy professor Philip J. Cook.
Associated Press High school dropouts, for example, spend an average of $597 annually on
survey found that lottery tickets, compared to $229 annually for college graduates. Likewise,
residents living individuals earning less than $25,000 annually spend nearly as much on
in the poorest lottery tickets yearly as those earning more than $100,000; $448 and $454
neighborhoods in the respectively.100 Multiple studies from across the nation support Cook's
state spent, on claims:
average, four times
as much of their !In California, a 1999 report found that one fifth of the state's lottery play-
income on lottery ers account for 90 percent of all ticket sales. The same report also noted
tickets as did that people from households earning less than $25,000 per year made up
those in wealthier 41 percent of the lottery's heaviest gamblers, spending an average of more
neighborhoods. than $830 per year.101
!In Wisconsin, an Associated Press survey found that residents living in

the poorest neighborhoods in the state spent, on average, four times as
much of their income on lottery tickets as did those in wealthier neighbor-
hoods.102
!In Virginia, four in 10 "heavy" players—those who spend an average of

$47 or more for lottery tickets in two weeks, the equivalent of more than
$1,200 a year—have household incomes of less than $25,000. Among the
other "heavy" players in Virginia, one in six have incomes of less than
$15,000 a year, and one in five have never finished high school. These
rates are roughly double those of all Virginia adults surveyed by the lottery
in 1995 and 1996.103
!A 1994 report on the gambling habits of Maryland's lottery players found
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that the poorest one-third of the state's population purchase half of the
state's lottery tickets. In addition, one-third of Maryland families with an
annual income of less than $10,000 spent one-fifth of their income on lot-
teries. A similar study conducted in Connecticut revealed that those with
incomes of less than $5,000 spent 14 times as much on the lottery as those
with incomes above $25,000.104
!A 1994 study in Detroit, Michigan found that persons with less than a
high school diploma spend over five times more as a percentage of their
income, than those with a college degree. Researchers Mary Herring and
Timothy Bledsoe noted: "The degree of lottery participation is a declining
function of income and education, and participation is higher among black,
male, and older respondents."105
Not surprisingly, the poor and less educated are also significantly more
A 1994 study in
likely to develop gambling addictions. Research collected by the NGISC
Detroit, Michigan
shows that individuals earning less than $25,000 per year are four times
found that persons
more likely to become pathological gamblers than those earning $50,000 or
with less than a high
more per year. The same report also found a strong relationship between
school diploma spend
academic achievement and gambling addiction. Specifically, individuals
over five times more
earning a high school degree or less are five to 11 times more likely to
as a percentage of
become problem or pathological gamblers.106
their income, than
those with a college
Father Thomas O'Gorman, a priest serving a poor, African-American
degree.
congregation on Chicago's West Side, supplies a poignant example of the
amount of spending on the lottery by the poor. One Sunday, out of curios-
ity, he asked his parishioners to save their losing tickets and bring them to
services next week. The following Sunday he collected nearly $5,000 in
losing ticket stubs.107
Low-income adults with gambling problems are also more likely to run
up debts that are proportionately higher than those of more affluent gam-
blers. A six-year study of 1,800 problem gamblers in Minnesota found that
those with incomes of less than $10,000 had debts averaging $18,700, and
individuals whose incomes ranged from $10,000 to $20,000 had debts
averaging $19,100. Problem gamblers with incomes of more than $50,000,
however, had debts averaging $37,800. "Individuals with an income of less
than $10,000 annually have little chance of overcoming such a burden,"
said William Rhodes, an author of the 1997 study. "People in this type of
situation may be forced to sell belongings, [and] change residences more
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frequently."108
C. Minorities
Lottery games, legal and otherwise, have existed in minority neighbor-
hoods for decades, according to public policy professor Philip Cook of
Duke University and co-author of Selling Hope: State Lotteries in
America.(109) And, like the poor, African-Americans and Hispanics tend
to play the lottery, particularly instant games, in disproportionately large
amounts. According to a March 1999 study by Cook, African-Americans
who regularly play the lottery spend nearly $990 annually on tickets, more
than four times higher than the $210 average for whites.110 Research at
the state level supports Cook's findings:
!A 1997 market survey for the Maryland lottery found that 61 percent of
Not only do minori-
heavy players, those spending more than $10 dollars a week on tickets,
ties spend more
were African-American, yet this group makes up only about 26 percent of
money on the lottery
the state's population.111
than whites, they are
also more likely to be
!African Americans make up the majority of the biggest spenders in
victimized by
Virginia—those who spent an average of more than $90 every two weeks
gambling addiction.
on the lottery, or the equivalent of $2,362 per year.112
Not only do minorities spend more money on the lottery than whites,
they are also more likely to be victimized by gambling addiction.
According to NGISC, African-Americans are three times more likely to be
problem or pathological gamblers than their white counterparts.113
Research mentioned earlier that was conducted by Georgia's Department of
Human Resources has found that while minorities comprise 28 percent of
Georgia's population, 48 percent of all problem or pathological gamblers in
the state are non-white.114 In New York, 32 percent of the state's problem
gamblers were found to be minorities, compared to the 11 percent to 15
percent who participated in the study.115
D. Underage Gamblers
In at least 24 states with lotteries, the message is the same: "Lotteries
benefit children." Indeed, 15 state lotteries donate 100 percent of their
profits to education.116 An advertisement for the Ohio Lottery
Commission, for example, states: "Some of our biggest winners have never
even heard of the Lottery."117
Despite Ohio's claims to the contrary, the lottery is familiar to almost
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every school-age child, especially teenagers. The fact that it is illegal for
teenagers to play the lottery or any other type of gambling does not seem
to keep them from playing.118 According to the National Research
Council's (NRC) review of the literature on adolescent gambling, between
52 and 89 percent of all teenagers have gambled in the past year, with an
average (median) value of 73 percent.119 This high rate of participation in
gambling makes it "an average and expectable activity among adoles-
cents," according to Dr. Howard Shaffer of Harvard Medical School's
Division on Addictions.120
Pediatric literature notes that teenagers are particularly susceptible to

the immediate gratification and excitement that comes with gambling.
"Gambling in our culture is not seen as a problem," says Jean Dede, a cer-
tified compulsive gambling counselor at an addiction treatment center in
Springfield, Illinois. "For young people, the lure of gambling can be hard
Pediatric literature
to resist. Kids love fantasy and action. They want to have cash and look
notes that teenagers
good. [Gambling] becomes about power and getting something for noth-
are particularly
ing."121 Gambling is also seen as a coping mechanism for dealing with
susceptible to the
daily stresses and feelings of depression.122
immediate
gratification and
So many teenagers are gambling that many become addicted to it.
excitement that
"Research shows that 90 percent of the nation's compulsive gamblers got
comes with gambling.
started in adolescence," according to Dr. Michael Gordon, an Atlanta
addictionologist who specializes in treating pathological gamblers.123
According to research conducted at McGill University in Montreal, the
average pathological gambler starts serious gambling at the age of 10.124
Much of this gambling is with parents and grandparents, so most children
with gambling problems do not appear to feel the need to hide their gam-
bling from their families.125 Indeed, less than 10 percent of children fear
getting caught gambling.126 Of even greater concern is the finding that the
time between the beginning of gambling and becoming a problem or patho-
logical gambler is significantly decreasing: that is, it is taking less time for
underage gamblers to become gambling addicts.127
While considerable disagreement surrounds the exact number of ado-

lescent problem gamblers, most studies concur they are up to three times
more likely than adults to develop serious gambling problems:128
!So many teenagers are gambling that more than 2.2 million adolescents
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are already addicted to gambling, according to a 1997 report by the

Harvard Medical School Division of Addictions. This number will likely
continue to grow, since the same report noted an additional 5.7 million
teenagers are at risk of becoming pathological gamblers.129
!An August 1999 report by the American Academy of Pediatrics estimates

that as many as 1.1 million adolescents ages 12 to 17—about five percent
of America's 20 million teenagers—are pathological gamblers, which is a
much higher percentage than adults (0.9 percent).132
Research at the state level supports these claims:

!According to research sponsored by the Georgia Department of Human
Resources in 1996, 62 percent of the state's adolescents have gambled. The
study also found that almost three percent (2.8 percent) of 13- to 17-year-
An August 1999 olds are already problem gamblers, and another 10.3 percent are at risk of
report by the becoming problem gamblers. In other words, a minimum of 8,400 Georgia
American Academy adolescents are already experiencing severe problems with their gambling,
of Pediatrics and another 47,950 adolescents are at risk of developing gambling diffi-
estimates that as culties.133
many as 1.1 million
adolescents ages 12 !Data from the Massachusetts Department of Public Health indicates that
to 17—about five lottery activity among that state's students is second only to alcohol in
percent of America's prevalence among illegal teen activity.134 Almost 70 percent of seventh
20 million graders have bought lottery tickets, 30 percent within the past month,
teenagers—are according to a 1994 survey of more than 2,000 students from nearly 100
pathological gam- public schools.135 Moreover, minors as young as nine years old were able
blers, which is a to purchase lottery tickets on 80 percent of their attempts.136 Another
much higher study conducted by the same organization in 1997 found that 49.5 percent
percentage than of 7th to 12th grade students in Massachusetts had purchased a lottery tick-
adults. et in their lifetime and 21.8 percent had done so in the past month.137
!In 1997, researchers at Louisiana State University-Shreveport surveyed

12,066 Louisiana students in grades six through 12. They found that 86
percent had gambled, many by age 13, making experimentation with gam-
bling more common than drug or alcohol use. Two-thirds—66 percent—
indicated they had gambled on scratch-off lottery tickets, and about 32 per-
cent had played Lotto. The survey also found that 10 percent of the state's
students are problem gamblers, and another 5.7 percent have been identi-
fied as pathological gamblers. In addition, African-Americans and
Hispanics were significantly more likely to be identified as pathological
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gamblers.138
!Ninety percent of Indiana's teenagers have gambled at some point in their

lives, according to a July 1998 report conducted by Louisiana State
University. Of the 3,270 students questioned, 64.7 percent said they had
played instant, or scratch-off, lottery games. Only 12 percent of the survey
sample had reached their 18th birthdays.139 Approximately 11.2 percent
of the teenagers surveyed identified themselves as problem gamblers,
while another 7.5 percent were classified as pathological gamblers.140
!A March 1998 survey by the New York Council on Problem Gambling of

more than 1,100 teenagers found that 75 percent have gambled in the past
year, with 15 percent participating on a weekly basis. Nearly one-third had
purchased lottery tickets. Despite their substantially lower incomes, ado-
Even more disturbing
lescents in New York reported spending approximately one-third as much
is what is happening
as adults on gambling. Fourteen percent of the students questioned were at
to these young people
risk of becoming problem gamblers, and 2.4 percent were identified as
as a result of their
already seriously addicted to gambling. Next to betting on games of per-
gambling. The
sonal skill and sports betting, the lottery was identified as the game most
aforementioned
likely to turn adolescents into problem and pathological gamblers.141
survey of high school
students in
!Two-thirds of Oregon youths gambled in 1998, and as many as 13,000
Massachusetts also
may be in need of gambling addiction treatment, according to a December
found five percent
1998 phone survey of 1,000 adolescents. The study, which was paid for by
had already been
the Oregon State Lottery and the Spirit Mountain Casino, identified four
arrested for a gam-
percent of the state's adolescents as problem gamblers. Another 11 percent
bling-related offense;
showed signs of being compulsive gamblers. Thirty percent of those sur-
10 percent experi-
veyed had played the lottery in the past year, often getting tickets from par-
enced family prob-
ents or other family members.142
lems due to gam-
bling; and eight
Even more disturbing is what is happening to these young people as a
percent had gotten
result of their gambling. The aforementioned survey of high school stu-
into trouble at work
dents in Massachusetts also found five percent had already been arrested
or school because of
for a gambling-related offense; 10 percent experienced family problems
gambling.
due to gambling; and eight percent had gotten into trouble at work or
school because of gambling.143 Likewise, a 1998 study by Louisiana
State University found that young people in Louisiana's criminal justice
system are four times more likely to have a gambling problem than are
their peers. Two-thirds of the hard-core gamblers in detention admitted
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stealing to finance their gambling.144
Adolescents with gambling problems are also more likely to have tried
many illegal drugs, including cocaine, steroids, and inhalants, according to
a 1998 report by the American Academy of Pediatrics. The same report
also found that adolescent problem gambling was associated with
increased instances of violence-related behaviors such as carrying a
weapon and being involved in a fight. These findings may understate the
seriousness of the problem, since a number of youths that engage in a vari-
ety of these high-risk behaviors may have already dropped out of school,
where the study was conducted.145
The emotional damage to adolescents with gambling problems can also

be enormous. According to a variety of studies conducted by child psy-
According to a
chologists Rina Gupta and Jeffrey Derevensky at McGill University in
variety of studies
Montreal, adolescent problem and pathological gamblers have lower self-
conducted by child
esteem and higher rates of depression than their peers.146 While adoles-
psychologists Rina
cents with gambling problems claim to have a peer support group, it is
Gupta and Jeffrey
often the case that old friends have been replaced with gambling associ-
Derevensky at McGill
ates.147 One of the most tragic statistics related to teenage gambling is the
University in
fact that 17 percent of all gambling-addicted adolescents will attempt sui-
Montreal, adolescent
cide.148
problem and
pathological
In addition to creating thousands of underage problem gamblers, state
gamblers have lower
lotteries also act as a "gateway drug," increasing all other types of gam-
self-esteem and
bling among teens, according to Dr. I. Nelson Rose, a professor at Whittier
higher rates of
Law School in Los Angeles who specializes in the study of gambling.149
depression than
After a state lottery was legalized in California in 1985, the percentage of
their peers.
high school students who gambled in any form increased by 40 percent.150
In the words of the Final Report of the National Gambling Impact

Study Commission: "[These findings] raise serious and troubling concerns
regarding the accessibility of gambling, particularly convenience type, and
the ineffective safeguards that are presently in place. Parents simply cannot
rely upon the government or the industry to prevent underage gam-
bling."151 There is reason to expect that the same rates of teen gambling
addiction and its associated consequences would occur in Alabama.
E. Senior Citizens
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While senior citizens are not the nation's largest sub-population of

gamblers, their numbers have grown as legalized gambling has spread
across the nation.(152)
In 1996, the average age of visitors to Las Vegas was 49.4 years, and
slightly more than three of every 10 visitors were age 60 or older, accord-
ing to the Las Vegas Convention and Visitors Authority.153 "Seniors are
participating in every type of gambling today," says Pat Fowler, executive
director of the nonprofit Florida Council on Compulsive Gambling. "It's
so acceptable in our society that everyone can gamble in any form they
choose without any fear of being criticized for it."154 In Minnesota, a 1997
survey found that 61 percent of adults age 65 years or older had gambled
in the past year, up from 50 percent two years earlier.155 "There's no ques-
tion senior gambling is on the rise," says Ron Karpin, head of the New
Jersey Council on Compulsive Gambling and founder of the first senior
While gambling
gambling outreach program in the country. "They're the fastest-growing
appears to be a
segment of the population, they're more affluent than ever, and—its' a sad
pleasant pastime for
comment on our society—they're bored."156
many senior citizens,
it is becoming a
At least one state lottery has tried to publicly target the senior citizen
genuine problem for
market. With ticket sales to seniors in decline since 1990, the Maryland
a growing number of
Lottery targeted seniors in 1993 with a "Lottery on Wheels," a mobile
them.
game-playing machine that visited convalescent homes and shopping malls
where seniors walked for exercise. Ticket sales to seniors increased from
21 percent of total sales in 1993 to 24 percent in 1994 and 1995, before
declining to 22 percent in 1996.157 The program was stopped in 1997
after the state's attorney general began investigating it at the request of the
president of the state's American Association of Retired Persons.158
While gambling appears to be a pleasant pastime for many senior citi-

zens, it is becoming a genuine problem for a growing number of them.
According to Pat Fowler, seniors are particularly vulnerable to the lure of
gambling for several reasons: their retirement income is steady, they have
a lot of free time, and they often do not have much to do. Seniors also face
a number of stresses not shared by the general population, such as losing
loved ones, retiring from a job, or moving to different parts of the country.
The stress of dealing with these challenges makes many seniors particular-
ly prone to gambling disorders. "Gambling provides an escape, a way to
cope," agrees Betty George, executive director of the North American
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Training Institute, a gambling treatment center.159
The fastest growing group of problem gamblers—in terms of those call-

ing for help—is senior citizens.160 In 1997, nine percent of calls to
Minnesota's hotline for problem gamblers were seniors, up from only three
percent five years earlier.(161) In 1993, 16.5 percent of callers to Florida's
hotline were older than 55. By 1997, that number had grown to 18.5 per-
cent.162 Of those who called in 1995, 72 percent identified the lottery as
the source of their problem.163
The spread of legalized gambling across the nation has also led to an
increase in the number of senior citizens who are facing financial ruin
because of problem gambling. "Problem gamblers who are retirees may
suffer more severe consequences because they may not have the ability to
The spread of
recover financially," says Dewey Price of the Missouri Department of
legalized gambling
Public Health, and president of the Missouri Alliance to Curb Problem
across the nation has
Gambling.164 While problem gamblers among the elderly typically do not
also led to an
accumulate as much debt as younger gambling addicts, they are particular-
increase in the num-
ly vulnerable to becoming problem gamblers, according to Eric Zehr, vice
ber of senior citizens
president of addiction recovery services at the Illinois Institute for
who are facing
Addiction Recovery at Proctor Hospital. "Gambling is a hidden disease
financial ruin
and the elderly are a hidden population within it. They think they're going
because of problem
to be socializing in their gambling groups."165
gambling.
"There is a growing number of older adults…who have an undetected
gambling problem, says Dennis McNeilly, a clinical psychologist at
Creighton University in Omaha, Nebraska. "It's a very, very hidden prob-
lem among the older age group. They are taking risks they've probably
never taken in their entire lives." McNeilly, who treats problem gamblers
at his clinic, said that three years after the introduction of riverboat gam-
bling at a nearby Iowa casino, bingo and casino gambling have become the
leading activities for Omaha-area adults over the age of 65.166 And, as
gambling activity has increased, so has the number of problem gamblers he
has treated. In 10 years of clinical practice, McNeilly never saw a single
case of addicted gambling disorder. In 1997 he saw 25 cases.167
V. The Lottery and Addictive Behavior

If a lottery is legalized in Alabama, its accessibility and ease of play
will almost certainly draw people into gambling who have not gambled
previously. In Texas, for example, researchers at the state Commission on
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Alcohol and Drug Abuse found that the introduction of a state lottery
increased the number of adults who gambled on any game from 48.6 per-
cent in 1992 to 67.7 percent in 1995.168 "It attracts people who have never
walked into a casino. It's completely different than skill gambling," says
Joanna Franklin, executive vice president of the National Council on
Problem Gambling.169
As gambling has become increasingly available and acceptable, the

number of problem and pathological gamblers has also increased.170
While the exact number of Americans with serious gambling problems
remains a serious source of debate, practically all studies acknowledge the
number is increasing. In 1997, the Harvard Medical School of Addictions
released a study summarizing the findings of 120 previously conducted
studies on the prevalence of gambling disorders. They found that the num-
ber of adults in the United States and Canada affected by severe gambling
More recently, a
disorders grew from 0.84 percent between 1977 and 1993 to 1.29 percent
March 1999 survey
between 1994 and 1997. In addition, 3.88 percent of teenagers and 4.67
commissioned for the
percent of college students were found to have a gambling problem—three
National Gambling
to four times greater than adults.171 This total number of compulsive
Impact Study
gamblers—about 4.4 million—is about equal to the nation's number of
Commission (NGISC)
hard-core drug addicts. Another 11 million Americans are problem gam-
found that five
blers, meaning they are at risk of becoming compulsive gamblers.172
million Americans
are problem or
A study released in February 1999 by the National Opinion Research
pathological
Center (NORC) estimates the number of gamblers with problems serious
gamblers, at a cost to
enough to require psychiatric treatment at about 2.5 million. The same
society of about $5
study identified another three million Americans as problem gamblers, and
billion annually.
15 million adults at risk of becoming pathological gamblers.173 More
recently, a March 1999 survey commissioned for the National Gambling
Impact Study Commission (NGISC) found that five million Americans are
problem or pathological gamblers, at a cost to society of about $5 billion
annually.174
For many of these problem gamblers, the source of their trouble is the
lottery. For example, of the 3,600 calls to the Florida Council on
Compulsive Gambling's hotline from July 1997 to June 1998, 27 percent
were from adults addicted to playing the lottery.175
Multiple addictions are also common among those with gambling
25
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problems. According to Nancy Petry, a researcher at the University of

Connecticut School of Medicine in Farmington, 28 percent of heroin
addicts, 22 percent of cocaine users and 12 percent of alcoholics were also
pathological gamblers—levels far higher than among the general popula-
tion.176
A. Addiction: Economic Costs

For almost 20 years, considerable controversy has surrounded attempts
to quantify the exact cost to society of problem and pathological gamblers.
Many early studies attempted to quantify this cost by using data from gam-
blers in treatment programs such as Gamblers Anonymous. Their findings,
in turn, have been extrapolated to the rest of the gambling population, gen-
erating annual "costs to society" ranging from about $8,000 to more than
$50,000.
These costs, though, may not represent the best estimates to apply to
the general public. In any given year, it is estimated that only about three
percent of gambling addicts seek professional help.177 Moreover, it has
been argued that the severity of these participants' circumstances—finan-
cial and otherwise—was so dire that it drove them to seek help.178 Thus,
it is very likely that the average cost to society of a pathological gambler—
at least inasmuch as such a cost can be measured in dollars—is, for now,
lower than earlier estimates.
Some of the most recent research attempting to quantify the costs to

society of problem and pathological gamblers was released in March 1999
by the National Opinion Research Center (NORC) as part of the National
Gambling Impact Study Commission's (NGISC) Final Report. The NORC
report examined selected economic costs to society (e.g., job loss; welfare
and unemployment benefits; degradation of the gambler's physical and
mental health; and gambling treatment costs) and the likelihood of a gam-
bling addict's burdening society with any or all of these costs. Based on
their estimates, NORC concluded that problem and pathological gamblers
cost society approximately $715 and $1,195 per year, respectively (or $758
and $1,266 in inflation-adjusted dollars).179
There are at least four reasons why the NORC estimates are substan-
tially lower than earlier assessments. First, there are many societal costs of
gambling that are impossible to calculate. These costs—such as family
problems and the mental anguish often created by gambling—are important
26
Theft By Consent
and should be considered, but they are not quantifiable and, therefore, can-
not be compared directly with other dollar costs.180
Second, of the more than 2,400 persons surveyed as part of the NORC
study, only 30 problem and 21 pathological gamblers were identified.181
Because of this extremely small sample size, it was impractical to assess
other annual costs to society that tend to occur infrequently (e.g., the costs
of divorcing, filing for bankruptcy, or being arrested and the cost of cor-
rections). Moreover, the NORC report did not attempt to quantify non-
recoverable money borrowed from friends, family or co-workers so the
gambler could continue his or her gambling. The authors of the NORC
report themselves consider their economic estimate a "lower bound."182
Had a larger sample of gambling addicts been available, the average over-
all cost to society would be somewhat higher.
Third, there is a problem with timing when it comes to associating a

gambler's addiction with his or her burden on society. In the words of a
1999 benefit/cost analysis of gambling to the Louisiana Control Board:
It may take quite a few years before some costs are
transformed from costs to the individual to costs
to society. Consider the following example: a
relatively affluent individual with a substantial gambling
problem is losing thousands of dollars a year gambling.
nitially, the person may withdraw money from savings,
borrow on credit cards or other sources, or not purchase
other things. At this point, all of the costs of the person's
gambling problem are internal. Eventually, if this pattern
persists, past savings will be gone, credit card debt will
be at the limit, and necessary purchases will be affected.
At that point, the individual may turn to other kinds of
behavior to support his or her gambling losses. These
behaviors may include personal bankruptcy, embezzlement,
and theft. When this happens, the costs become social.183
Finally, the NORC report provides some evidence that these quantifi-
able costs will not remain low. In addition to estimating the costs to soci-
ety of gambling addicts over the past year, the report also calculated the
lifetime economic costs to society of the same persons to be about twice the
amount of past-year estimates. This finding suggests two possible expla-
nations: first, that addiction may be a recurring problem for many gam-
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Theft By Consent
blers.184 If some gambling addicts succeed at temporarily pulling them-

selves out of their problem, this would help explain why so few seek pro-
fessional help. Another possible explanation for gambling addicts' lifetime
cost to society being only about twice the past-year rate is that the gamblers
polled may be relatively new addicts; men and women who have developed
gambling problems as the games have become more accessible to them in
the past few years.
1. What Gambling Addicts Cost Society
a. Productivity and Job Loss

Two ways pathological gamblers burden the public are through lower
job productivity and loss of employment. According to statistics gathered
from callers to a gambling crisis hotline at the Florida Council on
Two ways
Compulsive Gambling, 42 percent reported problems at work or school
pathological
related to their gambling, and 30 percent said they had missed work
gamblers burden the
because of their gambling habit.185
public are through
lower job
As for job loss, recent research by the National Research Council
productivity and
(NRC) finds that "roughly one-fourth to one-third of gamblers in treatment
loss of employment.
in Gamblers Anonymous report the loss of their jobs due to gambling."186
In fact, problem and pathological gamblers are two to three times as like-
ly, respectively, to have received unemployment benefits during the past 12
months.187
When the costs of lower productivity and higher rates of job loss are
coupled with the costs of prosecuting and incarcerating gamblers for
crimes caused by their addiction, the cost to society of an adult pathologi-
cal gambler totals about $13,200 a year, according to a 1994 economic
analysis by Dr. Robert Goodman.188 When adjusted for inflation, this cost
rises to approximately $15,700 per pathological gambler per year.189
b. Debt
On average, pathological gamblers have more than double the debt of
non-gambling households.190 In 1996, attendees at a conference on prob-
lem gambling in Pierre, South Dakota were told the average gambler enter-
ing treatment owes between $53,350 and $92,000.191 According to
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Thomas Croatis, the Director of Consumer Credit Counseling Services in

Des Moines, Iowa, the percentage of people seeking financial counseling
services because of excessive credit card debt related to gambling has risen
from two to three percent in the late 1980s to 15 percent today.192 "Credit
fuels the gambling addiction, which results in heavy credit card debt for
gamblers," says Ed Looney, executive director of the Council on
Compulsive Gambling of New Jersey, Inc. "Problem gamblers many times
have eight or ten different cards and are maxed out on all of them in terms
of their credit limits."193 A variety of studies support these anecdotes:
!In a 1996 report to the New York Council on Problem Gambling, Dr.
Rachel Volberg noted problem and pathological gamblers lost significant-
ly more in a single day, charged one or more credit cards to the limit, and
took out cash withdrawals on credit cards significantly more than non-
problem gamblers.194
Personal financial
disasters like job
!Another report based on a survey of 1,818 Louisiana residents found that,
layoffs, large medical
while non-problem gamblers spent an average of six percent of their
bills, divorce, and
monthly income on gambling, pathological gamblers spent an average of
easy access to credit
45 percent of their monthly income on gambling.195
remain the dominant
reasons for filing for
!From June 1998 to May 2000, California's Problem Gambling Helpline
bankruptcy.
received more than 10,000 calls. Of these, the average caller was $26,217
Gambling-related
in debt because of gambling.196
debt, however, may
be emerging as
c. Bankruptcy
another significant
Personal financial disasters like job layoffs, large medical bills,
contributor.
divorce, and easy access to credit remain the dominant reasons for filing for
bankruptcy. Gambling-related debt, however, may be emerging as another
significant contributor.197 While the exact number remains unknown,
America's fascination with gambling has placed financial pressures on
some families and helped contribute to a record high in personal bankrupt-
cies in 1999.198
Federal law does not require individuals or businesses in any state to

identify the reasons for filing bankruptcy.199 However, mounting evidence
suggests a link between gambling and bankruptcies:
!Nearly one in five pathological gamblers (19.2 percent) who participated
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in the 1999 NORC survey reported having filed for bankruptcy, compared
to 5.5 percent of low-risk gamblers and 4.2 percent of nongamblers.200
!"In one of the few studies to address the relationship between gambling
and bankruptcy, Robert Ladouceur and his associates found that 28 percent
of the 60 pathological gamblers attending Gamblers Anonymous reported
either they had filed for bankruptcy or reported debts of $75,000 to
$150,000."201
!Among lifetime problem and pathological gamblers in Montana, 10 per-

cent have filed for bankruptcy, compared to four percent Montanans who
do not gamble. By comparison, 22 percent of Montana residents in
Gamblers Anonymous have filed for bankruptcy.202
!In 1998, Nevada had the highest per-capita rate of bankruptcy in the
nation; one bankruptcy for every 39 households in the state, compared to
the national average of one in 68. One in seven bankruptcy petitions filed
in Las Vegas in August 1998 cited gambling debt as a reason for filing
bankruptcy. The gambling industry has attempted to downplay these sta-
tistics by claiming they are products of Nevada's explosive population
growth rate. While Nevada's population grew by 4.1 percent from 1997 to
1998—more than double the rate of any other state—its bankruptcy rate
rose even faster: 17 percent, compared to 2.7 percent for the nation as a
whole.203
!Twenty-eight percent of Iowans filing for bankruptcy consider themselves

gamblers, and 19 percent identified gambling debt as an important factor,
according to research by Tahira Hira, a human development and family
studies professor at Iowa State University. The same study also found that
gamblers declaring bankruptcy had 19 percent more debt than non-gam-
blers, and owed an average of $41,342.204
!One survey of 394 Gamblers Anonymous members in Wisconsin, Illinois

and Connecticut found that they each owed an average of $95,000. Nearly
one-third had lost or quit their jobs because of their gambling, and more
than one in five had declared bankruptcy.205
!Some addicts spend so much money on gambling they wind up on the
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street. In a random survey of more than 1,100 persons in 26 Rescue

Mission shelters in early 1998, 18 percent—almost one-fifth—cited gam-
bling as a reason for their homelessness. Eighty-six percent said they used
to play, or still played, the lottery, compared to 34 percent who gambled at
casinos and 25 percent who bet on horse and dog races. Only 23 percent
continued to gamble once they became homeless, yet that number rose to
37 percent after they began to pull their lives back together.206
2. What a Lottery Could Cost Alabama

No one knows how many Alabamians are already addicted to gam-
bling, so any estimates of the economic effects of introducing a lottery or
any other form of gambling to the state are, at best, speculative. However,
because Alabama has only four dog tracks and a handful of bingo sites
within its borders, the state may presently have a lower rate of addiction
than others where gambling is more widespread, more heavily advertised,
Some addicts spend
and more accessible.
so much money on
gambling they wind
All things being equal, one way to estimate the economic cost to soci-
up on the street. In a
ety of legalizing a lottery in Alabama would be to calculate the state's cur-
random survey of
rent population of gambling addicts as roughly equal to the national aver-
more than 1,100
age before the recent expansion of gambling venues. Subsequently raising
persons in 26 Rescue
the percentage of gambling addicts to the current national average would
Mission shelters in
provide an estimate of the number of problem and pathological gamblers
early 1998, 18
produced as a result of legalizing a lottery.
percent—almost
one-fifth—cited
According to research conducted by the Harvard Medical Center
gambling as a
Division on Addictions, the number of adults that could be classified as
reason for their
pathological gamblers grew from 0.84 percent in 1977-1993 to 1.29 per-
homelessness.
cent from 1994-1997.207 If legalizing a lottery in Alabama increased the
percentage of pathological gamblers in the state to the national average,
13,958 additional pathological gamblers would be created.208 Of these,
only about three percent per year—419 persons—would likely seek treat-
ment.209 If Goodman's inflation-adjusted estimate of $15,700 per gam-
bling addict is multiplied by the number of pathological gamblers created
by the legalization of a lottery, their cost to Alabama would be approxi-
mately $219.1 million per year.
B. Addiction: Emotional Costs
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Theft By Consent
The cost of pathological gamblers to society is expressed in more than

dollars and cents. The gambler himself often degenerates from an honest,
intelligent person to one who has almost no appreciation for the conse-
quences of his actions.
1. Depression
Gambling losses often lead to thoughts of desperation. According to a
1999 survey by the NRC, problem and pathological gamblers are four
times more likely to have poor mental health, and are almost twice as like-
ly to have received psychiatric treatment in the past year.(210) Not only
have several studies found that pathological gamblers have higher rates of
depression than non-pathological gamblers, research suggests problem
gambling leads to depression, instead of depression leading to gam-
bling.211
More than 10 years
of research has 2. Suicide
provided strong More than 10 years of research has provided strong evidence that gam-
evidence that bling addicts are significantly more prone to attempt suicide than non-
gambling addicts are gamblers:
significantly more
prone to attempt !In an early report in the Journal of Gambling Studies on the relationship
suicide than between problem gambling and suicide, a sample of 500 participants in
non-gamblers. Gamblers Anonymous was surveyed to gather data on suicidal history. Of
the 162 who returned the survey, 47 percent reported they had considered
suicide and 13 percent had attempted suicide. By comparison, an estimat-
ed 9.9 percent of heroin addicts in methadone treatment programs attempt
suicide, and only about 1.1 percent of the general population ever attempt
suicide over their lifetime.212
!More recently, the National Council on Problem Gambling found that

approximately one in five pathological gamblers attempts suicide.213
Similar studies of compulsive gamblers in New Jersey, Wisconsin and
Illinois report that 18 percent of compulsive gamblers in those states have
attempted suicide.214
!Estimates of the prevalence of gambling-related suicide may, in fact, be

understated. According to testimony before the NGISC, gambling-related
suicides and suicide attempts often are not reported as suicides, not explic-
itly linked to gambling, or disguised so as not to look like a suicide.215
!Pathological gamblers are 16 to 19 percent more likely to attempt suicide
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than are drug addicts, according to Phil Scherer, assistant clinical coordi-
nator at the Illinois Institute for Addiction Recovery.216
3. Emotional Costs: Others

Problem gamblers are not the only ones who suffer; the average patho-
logical gambler affects, directly or indirectly, eight other people, including
family, friends, and co-workers.217 A 1996 study in Australia of the
socioeconomic effects of gambling found that 27 percent of respondents
who gambled regularly said family or friends have criticized their gam-
bling, and that 22 percent felt gambling was more important than socializ-
ing.218 In a 1996 Virginia Lottery survey, 13 percent of those who had pur-
chased tickets said playing the lottery reduced the money they spent on
household expenses, and seven percent said lottery play had caused family
disagreements.219 Almost 20 percent of wife abuse cases involve domes-
tic disputes related to gambling.220 For spouses of gambling addicts, "they
Problem gamblers
always have that fear that their significant other is going to gamble again,"
are not the only ones
says Larry Atwood, a counselor at the Keystone Treatment Center in
who suffer; the
Canton, South Dakota. "Are they going to lose their house, their cars?
average pathological
Because of the wide mood swings associated with gambling, the gambler
gambler affects,
is either up or down like a yo-yo, depending on how they are doing."221
directly or indirectly,
eight other people,
Children often become the innocent victims of a parent's gambling
including family,
addiction. Child abuse also increases dramatically when gambling comes
friends, and
into an area, according to a 1995 report from Maryland's attorney gener-
co-workers.
al.222 A survey of 250 members of Gamblers Anonymous revealed 10 per-
cent of gamblers' children were abused by the gambler; 25 percent of chil-
dren had significant behavioral problems such as poor school work, run-
ning away, drugs, alcohol, or gambling of their own; and as many as 50 per-
cent of spouses said they were physically or verbally abused by the gam-
bler.223 Spouses and children of gambling addicts are also at far greater
risk for suicide attempts.224 "I've had instances where their kids have been
teased at school because the kids know their parents are out gambling, and
they haven't got any lunch money; they haven't got any clothes," Atwood
said.225
These marital stresses often culminate in divorce. According to the

1999 NORC report, 53.5 percent of pathological gamblers reported having
been divorced, versus 29.8 percent of low-risk gamblers and 18.2 percent
of non-gamblers. The same report also found that respondents represent-
ing approximately two million adults identified a spouse's gambling as a
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Theft By Consent
significant factor in a prior divorce.226
4. Getting Help
At present, only about three percent of Americans with moderate to
severe gambling-related problems are receiving treatment.227 Even if the
remaining 97 percent wished to receive help, problem gamblers are quick-
ly learning the mental health community is not equipped to help them.
Although there are about 10,000 treatment programs around the country
for substance abusers, fewer than 150 centers treat compulsive gamblers.
An even smaller number specifically cater to problem gamblers.228 Only
four states—Connecticut, Maryland, New Jersey, and New York—have
public gambling treatment centers.229 To complicate matters, only about
1,000 therapists and counselors nationwide are certified to provide gam-
bling treatment. Often, insurance companies do not cover the costs of
gambling-related therapy.230
One organization that has managed to grow with the spread of gam-
bling is Gamblers Anonymous. Since 1990, the number of GA programs
has increased by more than 400, including four chapters in Alabama.231
While GA meetings have risen in both number and attendance, though,
their effectiveness as a source of treatment for gambling addicts is quite
limited. According to Christopher W. Anderson, an Illinois therapist and
recovering gambler, studies show that less than five percent of people who
join GA stay clean for a year, unless GA meetings are coupled with some
other type of therapy. "Some people don't want to adhere to GA's dictum
to give up gambling," said Anderson. "They are only looking for ways to
control [their spending]. They think, 'How is GA going to help me? I owe
$100,000. I don't want to stop gambling. I want to stop losing.'"232
5. Help from the Industry?

Much of the cutting edge research on gambling addiction and its treat-
ment is actually being financed by the gambling industry. Aware that the
tobacco industry lost credibility when it denied the health risks of ciga-
rettes, the gambling industry is acknowledging that a small percentage of
the population has a serious problem with gambling. Some of the biggest
names in gambling research have accepted thousands of dollars in grants.
Others, however, call the studies self-serving because they focus on the
medical side and ignore the social costs that problem gambling can trigger.
"They have an agenda," says Valerie Lorenz, executive director of the
Compulsive Gambling Center, Inc. in Baltimore. If the gambling industry
34
Theft By Consent
can say something is neurologically wrong with a problem gambler, "then

it's not [their] responsibility."233
Two-thirds of states with legalized gambling earmark money to fund

gambling treatment centers, telephone hotlines for problem gamblers, and
so forth. The amount given to help gambling addicts, though, is appalling-
ly small compared to the billions in profits state lotteries make each year.
Of these, funding ranges from $10,000 to $2.3 million. One reason gam-
bling interests may devote so little money to treatment is the enormous
financial stake they have tied up in problem gamblers. Even though the
number of problem and pathological gamblers is relatively small, a num-
ber of studies show that these hardcore gamblers provide a significant per-
centage of any gambling operation's income:
!Of the people who played the lottery in 1998, the top five percent spent
One reason gambling
$3,473 or more per person, accounting for 51 percent of all lottery ticket
interests may devote
sales. The top 10 percent—who spend an average of $2,250 annually—
so little money to
account for two-thirds of total ticket sales. By comparison, the average
treatment is the
expenditure by a state lottery player in 1998 was $316, according to Duke
enormous financial
University public policy professor Philip J. Cook.234
stake they have tied
up in problem
!A 1991 survey by the University of Minnesota's Center for Urban and
gamblers.
Regional Affairs found that one percent of 459 gamblers surveyed wagered
50 percent of the money. Ten percent of those interviewed bet 80 per-
cent.235
!In Virginia, 29 percent of the state's lottery ticket sales are made to just
two percent of its adult population.236
!According to a 1996 survey of about 7,000 adults in four states and three
Canadian provinces, Illinois criminal justice professor Dr. Henry Lesieur
found that the five percent of adults with serious addictions accounted for
30 percent of all the money lost by those surveyed.237
!A similar survey conducted by Dr. Lesieur in Illinois found that two per-
cent of all adults bet 20 percent of the money spent on state-run games.238
!In Montana, compulsive gamblers make up only 3.6 percent of the adult
population yet purchase 17 percent of all lottery tickets.239
VI. The Lottery and Crime
35
Theft By Consent
Lotteries have a reputation as a "victimless vice;" that is, they hurt only
those who choose to play. In addition to hurting themselves and their fam-
ilies, however, problem gamblers often go on to commit crimes against the
rest of society.
A. Lotteries and Street Crime

By legalizing gambling, the state greatly reduces the stigma associated
with it, increasing the number of people who gamble, which increases the
number of problem gamblers. That, in turn, increases the numbers of those
who turn to crime to finance their addiction.240 In the words of an April
1999 report by the National Research Council: "As access to money
becomes more limited, gamblers often resort to crime to pay debts, appease
bookies, maintain appearances, and garner more money to gamble."241
Several studies have shown links between gambling and crime:
By legalizing
gambling, the state !A study of criminal statistics in all 50 states published in 1990 by profes-
greatly reduces the sors John Mikesell and Maureen A. Pirog-Good of Indiana University
stigma associated noted that "adoption of a state lottery is associated with a three percent
with it, increasing the increase in the state crime rate." This increase is the equivalent of 5,478
number of people additional property crimes per year in each state with a lottery.242
who gamble, which
increases the number !According to research by NORC, problem and pathological gamblers
of problem gamblers. have higher arrest and imprisonment rates than non-gamblers. About 33
That, in turn, percent of problem and pathological gamblers have been arrested, com-
increases the pared to only 4.5 percent of non-gamblers. Likewise, 21.4 percent of
numbers of those pathological gamblers and 10.4 percent of problem gamblers have been
who turn to crime imprisoned, compared to less than one percent of the non-gambling popu-
to finance lation.243
their addiction.
!The same types of crimes that come with other forms of gambling addic-
tion also accompany lotteries. According to research by the Compulsive
Gambling Center in Baltimore, at least two-thirds of compulsive gamblers
engage in criminal activity to finance their addiction, including check for-
gery, tax evasion, embezzlement, bookmaking, prostitution, selling drugs,
and fencing stolen goods.245 Before their addiction, many gambling
addicts had no prior criminal record.246
All taxpayers contribute toward the cost of policing, judging and incar-
36
Theft By Consent
cerating criminals. Gambling increases these costs.247 Consider the fol-

lowing studies:
!Approximately 47 percent of male pathological gamblers were involved

in at least one form of insurance-related crime. Dr. Henry Lesieur, the
author of the study, notes that each pathological gambler who commits this
type of crime averages $65,468 in fraudulent insurance claims, at an annu-
al cost to the insurance industry of about $1.32 billion.248
!Since 1992, crime and criminal justice system costs in Wisconsin due to
gambling amount to nearly $51 million a year, according to a study by the
Wisconsin Policy Research Institute.249
These charges do not include other costs such as reduced quality of liv-
With annual wagers
ing, and physical and emotional damage. The human and social costs for
in 2001 topping
addicted gamblers, their spouses, children, families, and society are impos-
$38.4 billion and
sible to calculate.250
gambling profits over
$11.8 billion, critics
B. Lotteries and Illegal Gambling
note that lotteries
With annual wagers in 2001 topping $38.4 billion and gambling prof-
provide a great
its over $11.8 billion, critics note that lotteries provide a great opportunity
opportunity for
for corruption—political and otherwise.251 Gambling proponents, howev-
corruption—political
er, argue that state-controlled lotteries actually reduce the amount of illegal
and otherwise.
gambling by drawing money away from numbers games sponsored by
organized crime. "The choice isn't lotteries or no gambling, realistically,"
according to Bill Vernon, spokesperson for the Massachusetts lottery. "The
choice is a lottery in which people play and you get $720 million to cities
and towns—or illegal numbers."252
Which of these claims is more accurate? When the lottery was legal-
ized in New Jersey, it took away only about 15 percent of all money origi-
nally spent on illegal gambling and created an untold number of new gam-
blers.253 In 1976, the Commission on the Review of the National Policy
toward Gambling concluded that illegal gambling actually increased from
nine percent in states with no legalized gambling to 22 percent in states
where three or more forms of gambling were permitted. The Commission
concluded that this rise was probably because of an increase in the number
of illegal gamblers overall.254 "The lottery introduces beginners to gam-
bling; illegal gambling then lures these new players into its games."255
Common "perks" used to entice otherwise legitimate lottery players into
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mob-sponsored games include immediate cash prizes, better odds, and spe-
cial services including lines of credit and delivery of bets and prizes.256
More recent research in New York and Kentucky supports these find-
ings.257
Illegal gambling operations have other reasons to welcome a state lot-

tery: Most illegal operators today use the state's daily game winning num-
bers as their own, to ensure their customers a fair game. The existence of
a state lottery also allows operators of the illegal games to engage in prac-
tice of "laying off" bets. In other words, if a bettor places a wager that, if
a winner, would bankrupt the bookie, the bookie makes the same bet on the
lottery. Hence, if the illegal bettor wins, the operator can pay him from the
money he has won from the state lottery.258
According to Jim Moody, chief of the FBI's organized crime section in

Washington, D.C., "Gambling and the industries surrounding it, like loan
sharking, are still the number-one money-makers for organized crime."259
C. Gambling and Corruption

When the infamous bank robber Willie Sutton was asked, "Why do you
rob banks?" he replied, "That's where the money is!" If opportunity is a
driving force for crime, communities with legalized gambling can expect
to attract criminals and corruption.260 Nationwide, the influence of cor-
ruption and organized crime is well documented:
!In Kentucky, five members of the Kentucky Lottery Commission resigned

after a report found that lottery officials wasted taxpayer's money on perks,
broke state laws in awarding contracts, and engaged in other dubious prac-
tices, including allowing retailers to keep lottery money for more than a
month.261
!Rhode Island-based GTECH is one of the nation's leading lottery con-

tractors, operating 24 of the nation's state-sponsored lotteries. In 1996 a
Fortune magazine investigation concluded that "[r]are is the company that
has faced as many allegations of baldly sleazy conduct as GTECH."262 As
an example, California's state lottery director resigned in 1993 after a con-
troversy erupted over his desire to award a $400 million contract to
GTECH without soliciting bids from other firms.263
!In New Jersey, three of the last six mayors of Atlantic City have been
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indicted for influence peddling and corruption, among other things.264 In

August 1992, Newark Internal Revenue Service director John J. Jenkins
announced that 11,829 possible violations of money laundering laws were
pending against New Jersey casinos.265
!Gambling interests have also been accused of corrupting the outcome of

a 1996 Senate race in Louisiana. In January 1997, defeated GOP nominee
Woody Jenkins presented the U.S. Senate Rules Committee with a 4,000-
page document to support his claim of election fraud, including a dozen
affidavits from people who say they were promised payment to vote ille-
gally. Also within the report were allegations that nursing home patients
and inner-city residents were transported to the polls in gambling compa-
ny vans, a clear violation of Louisiana voting laws.266
Economic and social
VII. Lotteries as a State-Sponsored Vice
concerns aside,
Economic and social concerns aside, state-sponsored lotteries also
state-sponsored
affect public and private morality. Like all other forms of gambling, lot-
lotteries also affect
teries are founded on greed; the desire to get something for nothing. For
public and private
up to two percent of America's adults and five percent of its teens, this
morality. Like all
greed becomes pathological, often destroying the life of the gambler and
other forms of
harming his or her family, friends, and co-workers.
gambling, lotteries
are founded on
In the past, both state governments and the federal government have
greed; the desire to
gone to great lengths to deter their citizens from destroying themselves. As
get something for
a result of their efforts, hundreds of billboards for cheap liquor have been
nothing.
removed from decaying inner city neighborhoods. Likewise, very few
public places remain in which people may smoke. Yet these same govern-
ments are pouring hundreds of millions of dollars into promoting behaviors
that produce the same devastating effects as other addictions. Dr. Robert
Goodman, author of The Luck Business, notes:
Rather than providing real hope for economic improvement,

public officials are promoting the illusion of economic
improvement—becoming deeply involved in finding
new ways of manipulating people's desire for a more secure future.
They are enticing people into taking part in what should
properly be called the 'pathology of hope.'267
By focusing on the benefits of the lottery and ignoring or minimizing
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Theft By Consent
the loss, most states with lotteries operate with the mindset of a gambling
addict in denial.268
A. Advertising the Lottery

In the words of President Grover Cleveland, "a public office is a public
trust."269 State governments that sponsor lotteries, however, can destroy
this trust by trying to both promote and regulate this vice.270 "In seven
major markets, three-quarters of the advertising time purchased by the
local state government was for selling the state's lotteries. The government
is pushing the consumption of a product which is monopolized by the state
and whose only public virtue is that it generates some revenue for state
government."271
Lottery advertising has been refined to a $364 million a year art, or

In the words of about $1 million per day.272 A variety of marketing methods are used by
President Grover the lottery, including identifying likely players, compiling extensive
Cleveland, "a socioeconomic profiles, conducting focus group research, test-marketing
public office is a new products, and so forth. Few avenues are left untouched: the Colorado
public trust." state lottery reportedly "spent $25,000 for a study called Mindsort to ana-
lyze the left and right sides of the brain to understand how to manipulate
player behavior."273 All of this research is done to retain players and
increase the player base.
"People judge the odds of winning partly on the basis of their ability to
recall instances of people who have won similar prizes," says Philip Cook,
a professor of public policy studies at Duke University and co-author of
(bital)Selling Hope: State Lotteries in America(eital). "If you couldn't
recall seeing anybody win, you'd say it's impossible. Lotteries, in their
advertising, do everything they can to make you think it's possible."274
In a move to the contrary of most lotteries, the Missouri Lottery origi-

nally carried the following disclaimer with its advertisements: "This mes-
sage is not intended to induce any person to participate in a lottery or pur-
chase a lottery ticket." This practice was dropped in 1988, however,
because it hurt sales. It is probably safe to assume that a private firm would
not be permitted to drop its government-mandated warning label if sales
were slack.275
Because they are state entities, lotteries are exempt from Federal Trade
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Theft By Consent
Commission truth-in-advertising standards and rules, and can in fact oper-

ate in a manner that true commercial businesses cannot.276 Of the 37
states and the District of Columbia that hold lotteries, only three states—
Minnesota, Virginia, and Wisconsin—have advertising guidelines written
into law forbidding ads designed to induce people to play.277 According
to the National Gambling Impact Study Commission:
While the Federal Trade Commission requires statements

about probability of winning in commercial sweepstakes
games, there is no such federal requirement for lotteries.
Lottery advertising rarely explains the poor odds of winning.
Many advertisements imply that the odds of winning are even
"better than you might think."278
As an example of the legal latitude some lotteries receive, the

Instead of promoting
California Lottery admitted in 2001 after it was sued that it had kept 11
the entertainment and
instant lottery games active even after all the grand prizes had been won.
recreational aspects
Although the case was thrown out, a separate division of the state's attor-
of playing, lottery
ney general's office said that if a private nonprofit group had conducted a
advertisers romanti-
raffle in the same way, it would probably have been in violation of state
cize the game in poor
laws against deceptive business practices.279
and lower-income
neighborhoods as a
Ample evidence also exists that many government-sponsored ads target
quick, easy and even
those audiences that will spend (and lose) the most. Instead of promoting
recommended way to
the entertainment and recreational aspects of playing, lottery advertisers
financial success.
romanticize the game in poor and lower-income neighborhoods as a quick,
easy and even recommended way to financial success.282 Some examples:
!One lottery advertisement showed a soda vendor at a sports game trying

to serve three customers at once, without success. The message below him
read: "If I win Pick-6, I won't have to do this anymore."283
!In one 1989 ad for the New York Lottery, a couple with eight children
stands in a room in a tenement. The message below them, written in
Spanish, states: "The New York Lottery helped me realize the Great
American Dream."284
!Another advertisement in New York showed a mother teasing a daughter
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Theft By Consent
for studying for a scholarship. After all, Mom had already bought a lottery
ticket to solve their financial problems.285
!In a Michigan ad, a man stands at the lottery counter and complains that
he has a better chance of being struck by lightning. Zap! A lightning bolt
leaves his hair singed. "One ticket, please," he responds.286
!An advertisement in Illinois showed a gentleman mocking those who

invest their money in stocks and bonds; he prefers to put it into the lot-
tery.287
The timing of lottery advertisements provides additional evidence that

lotteries target the poor. For example, an advertising campaign for Ohio's
SuperLotto game reads: "Schedule heavier media weight during those
One reason minori- times of the month where consumer disposable income
ties tend to play the peaks…Government benefits, payroll and Social Security payments are
lottery more released on the first Tuesday of each calendar month. This, in effect, cre-
frequently may be ates millions of additional, non-taxable dollars in the local economies of
that some lotteries which the majority is disposable."288
spend disproportion-
ate amounts One reason minorities tend to play the lottery more frequently may be
advertising in that some lotteries spend disproportionate amounts advertising in minori-
minority-oriented ty-oriented newspapers:
newspapers.
!In Kentucky, for example, the state lottery bought $9,000 worth of cam-
paign advertising in the Louisville Defender, an African-American weekly
newspaper. Because the newspaper has only about 1,800 readers, this
amounts to about five dollars per person. In contrast, the lottery paid the
Courier-Journal, the state's largest newspaper, $23,000 for the same cam-
paign. But because the newspaper's daily circulation is 232,000, the lottery
reached readers at a rate of about 10 cents apiece. Kentucky lottery
spokesman Rick Redman played down the finding, noting that spending at
the Louisville Defender was higher because the lottery helped sponsor an
insert for Black History Month. The campaign the lottery paid for at both
papers, however, was one year long.289
!In Ohio, the lottery advertised in the Cincinnati Herald, an African-

American weekly with a circulation of 10,000, but avoided the Cincinnati
Enquirer, with a daily circulation of 205,000.290
What makes lottery advertisements even more deplorable is that most
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Theft By Consent
promotional ads fail to accurately tell players the odds of winning a jack-
pot. Some examples:
!In New York, ads touting a $45 million pot gave the odds of winning
based on winning the lowest prize—about one in four chances. The odds
of winning the $45 million: one in 12.9 million.291
!In Indiana, one newspaper ad for the Hoosier Lottery's "Daily Millions"
proclaimed: "You could win the top prize of one MILLION dollars in cash,
all at once, EVERY DAY of the week!"[emphasis original] Another incen-
tive was also offered: buy a $1 ticket and get another one free. The odds
of winning the $1 million are one in 9.2 million.292
Other lottery ads play off of the fears of habitual players. For example,
a recent Maryland ad featured a restaurant customer who sees a "6" in his
What are the odds of
waitress' hairdo, a "2" in his pasta bowl and a "0" in the water ring under
winning the lottery?
his glass. When he fails to play the 6-2-0 combination that night, the
Next to impossible.
sequence turns out to be the Pick 3 winner. "Your numbers," the announc-
er asserts, "are out there."293
For the person already addicted to gambling, repeated exposure to these

ads can be disastrous. According to recent research by Dr. Jon E. Grant at
the University of Minnesota in Minneapolis, almost half of pathological
gamblers say that advertisements—on television, radio or billboards—can
trigger their desire to gamble. Of particular concern was the finding that
persons who are predisposed to gamble after exposure to gambling ads
were most likely to become addicted to it within one year of starting to
gamble.294
And what are the odds of winning the lottery? Next to impossible.
Even in the most honest forms of gambling, the odds are consistently with
the house, not the bettor, so that in the long run, the house will eventually
make more than it loses.295 This fact is especially true regarding large-
jackpot lotteries. Statistics show:
!In a typical state lottery, the odds of picking the right numbers are one in
12-14 million. By comparison, your chances of being struck by lightning
are one in 1.9 million.296
!The odds of winning the typical state lottery are equal to being dealt four
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Theft By Consent
royal flushes in a row in spades in a game of poker, then meeting four

strangers, all of whom have the same birthday.297
!If a person bought 100 $1 lottery tickets every week for his entire adult
life from age 18 to 75, that $296,400 investment would still only give him
less than one chance in 100 of hitting the jackpot.298
Lottery players can win smaller prizes by playing games in which

fewer numbers are chosen. These prizes, however, are considered to be
less of a benefit to players as they are a marketing strategy to encourage
participation in larger games. According to lottery expert John Koza, the
presence of several small prizewinners helps give the impression that many
people are winning, thus feeding interest in the larger, harder games. Most
winners of small prizes, though, don't pocket their winnings and walk
away. Instead, most "reinvest" it in the hopes of getting a larger prize, mak-
ing the total return to players even smaller.299 "If they buy $20 worth of
tickets and they win $5, they can play $25 worth of tickets for $20, and
they've got five extra chances of winning that top prize," says Mark
Nichols, an economics professor on the faculty of the University of
Nevada's Institute for the Study of Gambling and Commercial Gaming.300
If the potential payouts on smaller games involving the picking of three

or four numbers begin to favor bettors, and not the state, some lotteries
intervene by not selling any more tickets with certain number combina-
tions. For example, in late December 1999 and January 2000 the Ohio lot-
tery halted sales of the numbers "1999," "2000," and other combinations of
zeros and twos after sales exceeded the lottery's liability limits.301 In the
words of William Thompson, a University of Nevada Las Vegas gambling
expert, ""They [state lotteries] are saying they want to be in the gambling
business, but they don't want to be gamblers."302
"A person who buys a lottery ticket has about the same chance of win-
ning as someone without a ticket," notes Robert Detlefsen, an Alexandria,
Virginia political scientist who studies the gambling industry. "The differ-
ence is statistically insignificant."303
The impact these ads make upon an individual's ethics should be obvi-
ous. Dan Corditz, managing editor of Financial World, states, "It is strik-
ingly ironic that an activity that is frequently sold as a boon to education is
teaching youngsters that the best way to get rich is not to study or work
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Theft By Consent
hard, but to hit the lottery."304 Columnist George Will agrees:
Aggressive government marketing of gambling gives a

legitimizing imprimatur to the pursuit of wealth without
work. Gambling is debased speculation, a craving for
sudden wealth unconnected with investment that might make
society more productive...The more people believe in the
importance of luck, chance, randomness, fate, the less they
believe in the importance of stern virtues such as
industriousness, thrift, deferral of gratification, diligence,
studiousness.305
States that run multi-million dollar lotteries are not doing anything ille-
gal in the strictest sense. Winners eventually receive all their money—
minus taxes—often over a couple of decades. Yet if a private company
advertised using the same tactics as the lottery, federal regulatory agencies
would close it down.306 As Massachusetts marketing firm president
Herbert Kahn observes:
In order to attract financially unsophisticated people to the

lottery, the state misrepresents the winnings in almost exactly
the same way finance companies used to do before the
Truth-in-Lending Law. It is ironic that today not even the
sleaziest moneylender is permitted to do things that state
lotteries do as a matter of routine.307
Criticism of the advertising practices of lotteries is not confined to

those outside of the industry. In a May 1997 address to his fellow lottery
directors, Jeff Perlee, Director of the New York State Lottery, warned:
[Although most lottery advertising is responsible in its claims,

some ads] are so far-fetched and fanciful that they would not
stand up to the same "truth-in-advertising" standards to
which advertising conducted by private industry is held.
Add to that the fact that our advertising is often relentless in
its frequency, and lottery critics and even supporters are left
wondering what public purpose is served when a state's
primary message to its constituents is a frequent and
enticing appeal to the gambling instinct. The answer is none.
No legitimate purpose justifies the excesses to which some
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Theft By Consent
lottery advertising has resorted.308
B. Lottery Payouts
Even for the lucky handful of individuals who win the lottery, having
the winning ticket does not necessarily make them an instant millionaire.
If winners were given the lump sum of their prizes, they could invest the
full amount and live comfortably off of the interest, even after taxes.
Except for lotteries in two states—Illinois and Minnesota—this never hap-
pens.309 Rather, the state buys an annuity with a face value of the prize
sum (a $1 million annuity costs about $400,000) and uses the interest to
pay out the winnings over a period of 20 to 26 years, depending upon the
state in which the prize is won. At the end of the payout period, the win-
ner receives no more cash and the state keeps the annuity, further lowering
the amount it pays out in prizes. While most states with lotteries have dis-
Other studies have
pensed with attaching state taxes to lottery winnings, they are not exempt
shown that most
from federal or Social Security taxes. Moreover, inflation lowers the pur-
multi-million dollar
chasing power of the prize over time. Thus, a $1 million lottery winner
winners claim their
receives only about $33,000 a year for an average of 20 years, hardly what
winnings have made
could be considered millionaire status.310
their lives worse, not
better. One would
Other studies have shown that most multi-million dollar winners claim
think that after
their winnings have made their lives worse, not better. One would think
winning the lottery,
that after winning the lottery, people would be satisfied, but typically they
people would be
are not. According to research published in 1999 by Charles Clotfelter and
satisfied, but typically
his associates, lottery jackpot winners substantially increase their spending
they are not.
on lottery tickets after winning the lottery.311
Moreover, the jolt of sudden wealth is traumatic enough that about one-
third of lottery jackpot winners go bankrupt. "They [lottery winners] win
$10 million, and think they really have that much—but in reality they have
much less and get in deep over their heads," says Richard Salvato, CEO of
Woodbridge Sterling Capital, the nation's largest buyer of lottery payouts.
As many as four of every 10 lottery winners wind up in distress and sell
their remaining checks to Sterling or similar companies seeking the safe
investments. The companies even advertise toll-free numbers, such as 1-
800-WHY-WAIT.312
If a lottery winner is unfortunate enough to die before he or she has

been paid in full by the state, estate taxes on the unpaid remainder must be
paid immediately by the winner's family, with monthly penalties added
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Theft By Consent
after nine months. New York Times writer Lois Gould describes the night-
mare:
A preliminary analysis, drawn up for the North

American Association of State and Provincial Lotteries,
poses this question: "What can happen to a deceased lottery
winner's estate and beneficiaries? Answer: A financial disaster
of incredible proportion. The analysis describes the tax
liability for the heirs of an unmarried winner of a $20 million
jackpot—payable in annual installments of $1 million over
20 years—who dies after receiving the first payment.
The heirs would receive a tax bill of more than $5 million.313
Conclusion
A state-sponsored education lottery would not be in the best interest of
If a lottery winner is
the citizens of Alabama. Despite the popularity the lottery enjoys in many
unfortunate enough
states, the costs associated with a legalized lottery vastly outweigh its use-
to die before he or
fulness as a source of state revenue.
she has been paid in
full by the state,
The dollars generated by a state-sponsored lottery come at a high price.
estate taxes on the
By targeting the poor with glitzy, oversimplified ads and around-the-clock
unpaid remainder
ticket availability, lotteries sap vital dollars from the poor, perpetuating the
must be paid
desperation in low-income communities. As a result, the biggest winners
immediately by the
in states with lotteries are those who never play the game and reap the ben-
winner's family, with
efits of lower taxes, more affordable education, or both.
monthly penalties
added after nine
When lotteries are legalized, the number of problem and pathological
months.
gamblers increases dramatically. Crime also increases as gambling addicts
seek more money to bet on the lottery. Hundreds of millions of dollars in
social and economic costs are lost annually as a result of problem and
pathological gamblers.
In addition to the dollars lost to gambling, problem and pathological

gamblers destroy their families and themselves. Gambling addicts often
abuse their spouses and children, abuse alcohol or drugs, lose their jobs,
and attempt suicide with far greater frequency than non-gamblers.
Ironically, some of the biggest losers in states with lotteries are the
children lottery funds are supposed to help. As more states adopt the lot-
tery, the number of teen gamblers has risen sharply, perpetuating the
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Theft By Consent
growth of a generation of underage problem and pathological gamblers.

Lotteries also undermine the ideals of the importance of work and savings,
replacing them with a "get rich quick" philosophy that almost no lottery
players ever enjoy.
Government exists to serve and protect the people. Instead of working

in the interest of their citizens, state governments that run lotteries exploit
the greed, ignorance, and gullibility of citizens to make as much money as
possible. In order for government to win, its citizens must forever lose.
Too many Americans already live with a "something for nothing" men-
tality; this disease does not need to spread to Alabama's households where
public schools are funded on the backs of the poor, minorities, and the eld-
erly.
Too many Americans
already live with a Endnotes
"something for
nothing" mentality;
this disease does not
need to spread to
Alabama's house-
holds where public
schools are funded on
the backs of the poor,
minorities, and
the elderly.
48
(1) National Opinion Research Center at the University of Chicago, Gemini Research, and the Lewin Group,
Gambling Impact and Behavior Study, Report to the National Gambling Impact Study Commission, April 1, 1999,
p. 7.
(2) “Lottery Fast Facts,” LaFleur’s 2001 World Lottery Almanac, www.lafleurs.com, p. 19.
(3) “FY00 and FY01 Sales and Profits,” National Association of State and Provincial Lotteries, www.naspl.org; and
“State and County Quick Facts: USA,” U.S. Census Bureau, http://quickfacts.census.gov, 2001. According to
Census data, the population of the United States in 2001 was approximately 284,796,887.
(4) Scott Dyer, “Powerball’s odds, jackpots to rise,” The Advocate (Baton Rouge, LA), July 30, 2002.
(5) National Gambling Impact Study Commission, “Lotteries,” www.ngisc.gov/research/lotteries.htm. p. 1.
(6) “U.S. lotteries’ cumulative sales, prizes & profits,” LaFleur’s 2001 World Lottery Almanac, www.lafleurs.com.
(7) “FY00 and FY01 sales and profits.”
(8) LaFleur’s Fiscal 1998 Lottery Special Report, www.lafleurs.com.
(9) Charles T. Clotfelter and Philip J. Cook, Selling Hope: State Lotteries in America (Cambridge, MA: Harvard
University Press, 1989), p. 22.
(10) National Gambling Impact Study Commission, National Gambling Impact Study Commission Final Report
(Washington, DC: author, 1999), pp. 1-4. Since the release of the NGISC Final Report, South Carolina has
legalized its own state-sponsored lottery.
(11) “History of lotteries,” Georgia Lottery Corporation, www.galottery.com/lottery/lotteryhist.htm.
(12) Michael Heberling, “State lotteries: Advocating a social ill for a social good,” The Independent Review, vol. 6,
no. 4, Spring 2002, p. 597.
(13) Charles J. Dean, “Schools Hot Topic in State’s Elections,” Birmingham News, October 2, 2002, p. 8 A.
(14) Mark Thornton, The Economic Benefits of an Alabama State Lottery (Montgomery, AL: Office of the
Governor, 1998), p. 38.
(15) Robert Goodman, The Luck Business (New York: Free Press, 1995), p. 144.
(16) Peter Keating, “Lotto fever: We all lose!” Money, May 1996.
(17) National Gambling Impact Study Commission, National Gambling Impact Study Commission Final Report.
(18) Dara Kam, “Lawmakers argue over how to pay schools,” The News-Press (Fort Myers, FL), August 8, 2001.
(19) Michael Gormley, “Critics: Lottery ads aim to boost Pataki’s political fortunes,” Boston Globe, November 19,
2001.
(20) “Slim chances for fat lottery winnings,” www.speakout.com, May 10, 2000, as cited by Michael Heberling,
Ibid, p. 603.
(21) “A review of the reasons to vote ‘no’ on the lottery,” The State (South Carolina), November 5, 2000, as cited by
Michael Heberling, Ibid, p. 603.
(22) Hereafter, for the sake of clarity, “casinos” will refer to both casinos and riverboat gambling. Exceptions will
be noted.
(23) Patrick A. Pierce, “Roll the dice: The diffusion of casinos in American states.” Paper presented at the annual
meeting of the West Virginia Political Science Association, Morgantown, West Virginia, October 1997.
(24) Unaudited data from LaFleur’s Lottery World Online Magazine, wysiwyg://58/http://www.lafleurs.com; and
Rachel Volberg, Gemini Research (Roaring Springs, PA), personal communication, Summer 1998.
(25) Kevin Corcoran, “Some question state’s reliance on gambling,” Indianapolis Star, May 14, 2001.
Unaudited data from LaFleur’s Lottery World Online Magazine; and Rachel Volberg, personal communication,
Summer 1998.
(26) John W. Kindt, “The negative impacts of legalized gambling on businesses,” University of Miami Business
Law Journal, vol. 4, no. 2, 1994, pp. 103-113.
(27) Ibid.
(29) According to U.S. Census data (www.census.gov), Alabama’s total population in 2001 was 4,464,356.
(30) Robin DeMonia, “Georgia Lottery gets 4.5% Alabama boost,” Birmingham News, February 23, 1999.
(31) “U.S. Lotteries’ Unaudited FY00 Sales by Game,” LeFleur’s Lottery World, www.lefleurs.com; Florida
Lottery, January 19, 2001, personal communication.
(32) Mississippi Gaming Commission, “Quarterly Survey Information: January 1, 2002—March 31, 2002,”
http://www.mgc.state.ms.us/
(33) Ibid. See also Mississippi State Tax Commission, Miscellaneous Tax Bureau, “Casino Gross Gaming
Revenues,” May 14, 2002, tp://www.mstc.state.ms.us www.mstc.state.ms.us.
(34) www.silverstarresort.com.
(35) Charles McLemore, Arkansas Department of Tourism, personal communication, February 1997.
(36) “Travel to and through Tennessee,” Travelscope 1995 (New York: Travel Industry Association of America,
September 1996).
(37) Mark Thornton, “Gambling on a state lottery,” Birmingham News, October 5, 1994, p. 9A.
(38) “U.S. lotteries’ cumulative sales, prizes & profits.”
(39) Matt Friederman, “Take close look at other states, vote 'no' on lottery issue on Nov. 3,” Clarion-Ledger
[Jackson, MS], October 28, 1992, p. 13.
(40) Dick Gentry, “It’s two to one the lottery won’t make it in Alabama,” Birmingham Business Journal, May 1,
1995, p. 4.
(41) John W. Kindt, “Legalized gambling activities: The issues involving market saturation,” Northern Illinois
University Law Review, vol. 15, no. 2, p. 272.
(42) John Ritter, “Pace, purses not enough for gamblers,” USA Today, May 5, 1995, p. 2A.
(43) Peter Keating, “Lotto fever: We all lose!”
(45) “U.S. lottery roundup,” LaFleur’s Lottery World, October 1998, p. 15.
(46) Ibid, p. 16.
(47) Ibid.
(49) Ledyard King, “With lottery profits running out of luck, the question is what’s next for the games,” The
Virginian-Pilot, June 29, 1998.
(50) “Frequently Asked Questions,” New Hampshire Sweepstakes Commission, 2002; and online information from
the Georgia Lottery website, www.georgialottery.com.
(52) Palmetto Family Council, The Georgia Lottery: A Peach or a Pit? (Columbia, SC: Palmetto Family Council,
March 2000), as cited by Michael Heberling, Ibid, p. 600.
(54) “Washington ticket sales remain steady, but ‘jackpot fatigue’ is taking its toll,” Seattle Post-Intelligencer,
September 10, 2001.
(55) Rachel A. Volberg, Changes in Gambling and Problem Gambling in Oregon: Results from a Replication Study,
1997 to 2000 (Northampton, MA: Gemini Research, February 2001); and “FY00 and FY01 sales and profits.”
(56) “Washington ticket sales remain steady, but ‘jackpot fatigue’ is taking its toll.”
(57) Peter Luke, “Lottery takes hit from casinos,” Michigan Live, June 25, 2001. Data from North American State
& Provincial Lotteries, www.naspl.org.
(58) “Lottery increases sales and gives millions more to Common School Fund,” Illinois Lottery press release, July
18, 2002, http://www.illinoislottery.com/pr/July1802.htm.
(60) Mark Maley, “Lottery surveys show people want more prizes, publicity,” Milwaukee Journal Sentinel,
September 13, 1998.
(61) Texas Lottery Commission, Agency Strategic Plan 2003-2007, June 17, 2002.
(62) Gary Heinlein, “Casinos could hurt state lottery,” Detroit News, January 20, 1999. The aforementioned
payback rates do not, of course, mean that gamblers “win” 55 cents every time the play the lottery, only that 55
cents of every dollar goes to a prize—usually not the person buying the ticket.
(63)“2000 U.S. gross gambling revenues by industry and change from 1999,” Gross Annual Wager of the United
States, Christiansen Capital Advisors LLC, www.cca-i.com.
(64) Ibid.
(65) Ibid; and “U.S. fiscal 2000 VLT/VGD guide,” LaFleur’s 2001 World Lottery Almanac, p. 31,
www.lafleurs.com.
(66) Ray Bates, “The future of the State’s Games,” LaFleur’s Lottery World Online, February 2, 1999, p. 8,
www.lafleurs.com.
(67) Eugene M. Christiansen, The Gross Annual Wager of the United States: 1999, Executive Summary, www.cca-
i.com, p. 4.
(68) Colorado and Pennsylvania recently joined the Multi-State Lottery Association(EMDASH)increasing the total
number of states participating to 23(EMDASH)so their data are not included.
(69) “Big lotteries’ real losers,” New York Times, August 29, 2001.
(70) Scott Dyer, “Powerball’s odds, jackpots to rise.”
(71) John W. Kindt, “U.S. national security and the strategic economic base: The business/economic impacts of the
legalization of gambling activities,” Saint Louis University Law Journal, vol. 39, no. 2, Winter 1995, p. 579.
(72) John W. Kindt, “Legalized gambling activities: The issues involving market saturation,” p. 272.
(73) Matt Friederman, p. 13.
(74) “Not so small change,” Los Angeles Times, March 26, 1986.
(75) Lynn P. Clayton, “An incredibly strong argument against a state lottery,” Baptist Messenger, April 10, 1986, p.
4.
(76) Kenny R. Coventry and Iain F. Brown, “Sensation seeking in gamblers and non-gamblers and its relation to
preference for gambling activities, chasing, arousal and of loss of control in regular gamblers,” Gambling Behavior
and Problem Gambling, vol. 25, 1993.
(77) “Do lotteries really make sense for education?” CQ Researcher, March 18, 1994, p. 1.
(78) Jack R. Van Der Slik, “Legalized gambling: Predatory policy,” Illinois Issues, March 1990, p.30.
(79) “Lotteries: Beware of easy money,” Charleston [SC] Post & Courier, October 15, 1998.
(80) Ivan L. Zabilka, “Position paper concerning casinos,” The Family Foundation, 1994, p. 3.
(81) A. Furnham and A. Lewis, The Economic Mind (London: Harvester Press, 1986).
(82) Bill Estep and Chris Poore, “Lexington’s poor areas spend more on lottery,” Lexington Herald-Leader [KY],
March 29, 1998; and Philip L. Hersch and Gerald S. McDougal, “Do people put their money where their votes are?
The case of lottery tickets,” Southern Economic Journal, vol. 56, July 1989, pp. 32-38.
(83) Charles Nunez, Jr., “Theft by consent,” Community Impact News, Michigan Family Forum, June 1994, p. 1.
(84) Sandeep Mangalmurti and Robert A. Cooke, An Oklahoma State Lottery: Seducing the Less Fortunate?
Resource Institute of Oklahoma, April 1994, p. 6.
(85) Ibid.
(86) Public Affairs Research Council of Alabama, “How Alabama’s taxes compare,” The PARCA Report, no. 42,
Spring 2001, www.parca.samford.edu.
(87) Nicholas Johnson et al., “State income tax burdens on low-income families in 2001,” Center on Budget and
Policy Priorities, February 26, 2002, www.cbpp.org.
(88) Ivan L. Zabilka, Striving after the Wind (Wilmore, KY: Ivan L. Zabilka), p. 22.
(89) National Gambling Impact Study Commission, National Gambling Impact Study Commission Final Report, p.
xxiii.
(90) Data produced by Charlotte Steeh, Georgia State University, Applied Research Center, School of Policy
Studies, September 10, 1998.
(91) The Georgia County Guide (Athens: University of Georgia, 1998).
(92) Michele McNeil Solida and Mark Nichols, “Lower-income areas get the hard sell,” Indianapolis Star, October
28, 2001.
(93) Ira Chinoy and Charles Babington, “Low-income players feed lottery cash cow,” Washington Post, May 3,
1998, p. A1.
(94) Paul Della Valle and Scott Farmelant, “A bad bet: Who really pays for the Massachusetts Lottery’s success?”
Worcester Magazine [MA], January 27, 1993.
(95) Spencer Hunt, “Lower-income Ohioans more likely play lottery,” Cincinnati Enquirer, May 1, 2001.
(96) Glenn Adams, “Poor play lottery in Maine,” Associated Press, September 1, 2001.
(97) Bill Estep and Chris Poore, Ibid.
(98) Charles Walston, “Has the gamble paid off?” Atlanta Constitution, June 26, 1994, p. D1.
(99) Ira Chinoy and Charles Babington, p. A1.
(100) Barry M. Horstman, “Lottery sales: Poorest buy most tickets,” Cincinnati Post, March 20, 1999.
(101) “California officials concede poor gamblers fuel revenues,” Las Vegas Sun, February 24, 2000.
(102) “Lottery claims bigger slice of poor’s income,” Chicago Tribune, May 26, 1995.
(104) Ronald P. Keevan, “Pros and cons of gambling amendment: Money used for legal betting drains resources for
the poor,” St. Louis Post-Dispatch, March 27, 1994, p. 3B.
(105) Mary Herring and Timothy Bledsoe, “A model of lottery participation: Demographics, context and attitudes,”
Policy Studies Journal, vol. 22 (Summer 1994), pp. 245-257.
(106) National Gambling Impact Study Commission, National Gambling Impact Study Commission Final Report,
pp. 4-8.
(107) Robert McClory, “The big gamble,” Chicago Reader, May 11, 1992, p. 18.
(108) Pat Doyle, “Poor Minnesotans with gambling problem run up higher debts,” Star Tribune [Minneapolis], July
25, 1997.
(109) Tim Novak and Jon Schmid, “Lottery picks split by race, income,” Chicago Sun-Times, June 22, 1997.
(110) Barry M. Horstman, “Lottery sales: Poorest buy most tickets.”
(111) Ira Chinoy and Charles Babington, p. A1. Population estimates made using U.S. Bureau of the Census,
“Resident population by race, Hispanic origin, and state: 1994,” Statistical Abstract of the United States: 1997 (117th
ed.) (Washington, DC: USGPO, 1997), p. 34.
pp. 4-8.
(114) Rachel A. Volberg, Gemini Research, “Gambling and problem gambling in Georgia.” Report to the Georgia
Department of Human Resources, May 2, 1995, p. 20.
(115) Joe Atkins, “The states' bad bet,” Christianity Today, vol. 35, November 25, 1991, p. 20.
(116) “U.S. Lotteries’ Government Profits Earmarking,” LaFleur’s 2001 World Lottery Almanac, p. 23,
www.lafleurs.com.
(117) Laurel Shaper Walters, Ibid.
(118) Howard J. Shaffer, “The emergence of youthful addiction: The prevalence of underage lottery use and the
impact of gambling,” Technical Report 121393-100 (Boston: Massachusetts Council on Compulsive Gambling,
1993), as cited by James R. Westphal, Jill A. Rush, and Lee Stevens, “Gambling behavior and substance abuse
among ‘high risk’ adolescents,” submitted for publication to Journal of Gambling Studies, January 1997.
(119) National Research Council, “Pathological Gambling: A Critical Review,” (April 1, 1999), pp. 3-9.
(120) Howard J. Shaffer and Matthew N. Hall, “Estimating the prevalence of adolescent gambling disorders: A
quantitative analysis and guide toward standard gambling nomenclature,” Journal of Gambling Studies, vol. 12, no.
2, 1995, pp. 193-214.
(121) “Gambling addiction often starts early,” Illinois Times-Herald Online, February 23, 1999.
(122) Rina Gupta and Jeffrey L. Derevensky, “An empirical examination of Jacob’s General Theory of Addictions:
Do adolescent gamblers fit the theory?” Journal of Gambling Studies, vol. 14, 1998, pp. 17-49; and Rina Gupta and
Jeffrey L. Derevensky, Treatment programs for adolescent problem gamblers: Some important considerations.
Invited address presented at the annual meeting of the American Psychological Association, Boston, August 1999.
(123) Tom Nugent, “1 million teens addicted to gambling: U.S. report,” AAP News, vol. 15, August 1999, p. 7.
(124) Rina Gupta and Jeffrey L. Derevensky, “Familial and social influences on juvenile gambling,” Journal of
Gambling Studies, vol. 13, 1997, pp. 179-192; Rina Gupta and Jeffrey L. Derevensky, “Adolescent gambling
behavior: A prevalence study and examination of the correlates associated with excessive gambling,” Journal of
Gambling Studies, vol. 14, 1998, pp. 227-244; and H. J. Wynne, G. J. Smith and Durand F. Jacobs, Adolescent
Gambling and Problem Gambling in Alberta. Prepared for the Alberta Alcohol and Drug Abuse Commission,
Edmonton, AB, 1996.
(125) Rina Gupta and Jeffrey L. Derevensky, “Familial and social influences on juvenile gambling,”; and R.
Ladouceur, C. Jacques, F. Ferland, and I. Giroux, “Parents’ attitudes and knowledge regarding gambling among
youths,” Journal of Gambling Studies, vol. 14, pp. 83-90.
(126) Rina Gupta and Jeffrey L. Derevensky, Treatment programs for adolescent problem gamblers: Some
important considerations.
(127) Rina Gupta and Jeffrey L. Derevensky, “Familial and social influences on juvenile gambling”; and R.
Ladouceur, C. Jacques, F. Ferland, and I. Giroux, “Parents’ attitudes and knowledge regarding gambling among
youths.”
(128) Durand F. Jacobs, “Illegal and undocumented: A review of teenage gambling and the plight of children of
problem gamblers in America,” in Howard J. Shaffer et al. (Eds.), Compulsive Gambling: Theory, Research and
Practice (Lexington, MA: Lexington Books, 1989).
(129) Howard J. Shaffer, Matthew N. Hall, and Joni Vander Bilt, Estimating the Prevalence of Disordered
Gambling Behavior in the United States and Canada: A Meta-Analysis (Boston, MA: Harvard Medical School
Division on Addictions, December 1997), pp. 34, 51.
(130)Durand F. Jacobs, “Illegal and undocumented: A review of teenage gambling and the plight of children of
problem gamblers in America.”
(131)Howard J. Shaffer, Matthew N. Hall, and Joni Vander Bilt, pp. 34, 51.
(132) The National Research Council, which published the report noted in this article, also notes that “adolescent
measures of pathological gambling are not always comparable to adult measures and that different thresholds for
adolescent gambling problems may exist” (pp. 3-9). Source: Tom Nugent, pp. 1, 7.
(133) Rachel A. Volberg, Gemini Research, “Gambling and problem gambling among Georgia adolescents.” Report
prepared for the Georgia Department of Human Resources, June 25, 1996.
(134) “7th-12th grade students lottery activity exceeded only by alcohol prevalence,” The Wager, Massachusetts
Department of Public Health, January 16, 1996.
impact of gambling.”
(136) Scott Harshbarger, Attorney General of the Commonwealth of Massachusetts,” Report on the Sale of Lottery
Tickets to Minors in Massachusetts,” July 1994, pp. 3-4.
(137) Health & Addictions Research, Inc., Adolescent Substance Use in Massachusetts: Trends Among Public
School Students (Boston: Massachusetts Department of Public Health, 1997).
(138) James R. Westphal, Jill A. Rush, Lee Stevens, Ron Horswell, and Lera Joyce Johnson, “Statewide baseline
survey: Pathological gambling and substance abuse–Louisiana students, 6th through 12th grades” (Louisiana State
University Medical Center, Department of Psychiatry, April 27, 1998).
(139) Doug Sword, “Many Indiana teens are gambling,” Indianapolis Star/News, July 11, 1998.
(140) Ibid.
(141) Rachel A. Volberg, “Gambling and problem gambling among adolescents in New York,” Report to the New
York Council on Problem Gambling, Inc. (Northampton, MA: Gemini Research, March 1998); and John Wilen,
“Panel: 80 percent of youth have tried gambling,” Las Vegas Sun, November 12, 1998.
(142) Brad Cain, “Study: Two-thirds of Oregon youths have gambled in the past year,” Oregon Live, December 8,
1998.
impact of gambling,” p. 12.
(144) James R. Westphal, “Adolescent gambling behavior,” Louisiana State University Medical Center-Shreveport,
presented to the National Gambling Impact Study Commission, Las Vegas, Nevada, November 11, 1998, as cited by
James C. Dobson, Focus on the Family Family News, Colorado Springs, Colorado, April 1999, p. 1.
(145) Jenny Proimos, Robert H. DuRant, Judith Dwyer Pierce, and Elizabeth Goodman, “Gambling and other risk
behaviors among 8th- to 12th- grade students,” Pediatrics, August 1998.
(146) Rina Gupta and Jeffrey L. Derevensky, “Adolescent gambling behavior: A prevalence study and examination
of the correlates associated with excessive gambling,”; Rina Gupta and Jeffrey L. Derevensky, “An empirical
examination of Jacob’s General Theory of Addictions: Do adolescent gamblers fit the theory?”; and N. Marget, Rina
Gupta and Jeffrey L. Derevensky, The psychosocial factors underlying adolescent problem gambling. Poster
presented at the annual meeting of the American Psychological Association, Boston, August 1999.
(147) Jeffrey L. Derevensky, Prevention of youth gambling problems: Treatment issues. Paper presented at the
Canadian Foundation on Compulsive Gambling Annual Conference, Ottawa, ON, April 1999.
(148) Tom Nugent, p. 7.
(149) Doug Ferguson, “Experts caution legislators to watch gambling explosion,” Birmingham News, August 15,
1995, p. 3A.
(150) Charles T. Clotfelter and Philip J. Cook, Ibid.
(151) National Gambling Impact Study Commission, National Gambling Impact Study Commission Final Report, p.
7-23.
(152) “More help needed for treating elderly gamblers,” Minneapolis-St. Paul Star Tribune, August 28, 1997.
(153) Tom Breckenridge, “Gray-headed gamblers,” Plain Dealer [Cleveland, OH], February 9, 1998.
(154) Robert Sargent Jr., “Gaming industry finding retirees are a good bet,” Orlando Sentinel, February 20, 1998.
(155) “More help needed for treating elderly gamblers,” Ibid.
(156) Craig Savoye, “Growth of retiree gambling raises stakes,” Christian Science Monitor, April 19, 2001.
(157) Laura Sullivan, “Lottery goes for the gray,” Baltimore Sun, August 8, 1997.
(158) Howard Libit, “Lottery ends games aimed at the elderly,” Baltimore Sun, August 19, 1997.
(159) John Wilen, “Boredom draws seniors to casinos, gambling,” Las Vegas Sun, June 19, 1998.
(160) Robert Sargent Jr., Ibid.
(161) “More help needed for treating elderly gamblers,” Ibid.
(162) Robert Sargent Jr., Ibid.
(163) Pat Fowler, “Senior citizen gambling in Florida,” Florida Council on Compulsive Gambling, Inc., July 1998.
(164) Rick Alm, “Help is available for problem gamblers,” Kansas City Star, August 3, 2001.
(165) Michael Smothers, “Gambling can be more than fun, games,” Peoria Journal Star, October 15, 2001.
(166) Dave Berns, “Gambling becoming a problem for more seniors, panel says,” Review-Journal [Las Vegas, NV],
June 19, 1998.
(167) John Wilen, “Boredom draws seniors to casinos, gambling.”
(168) L. S. Wallisch, Gambling in Texas: 1995 Surveys of Adult and Adolescent Gambling Behavior, Executive
Summary (Austin, TX: Texas Commission on Alcohol & Drug Abuse, 1996).
(169) “Thousands of Texans addicted to playing lottery, experts say,” Ibid.
(170) Several terms are used to define “pathological gambling” and “problem gambling.” Pathological gambling is
classified by the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-
IV) as an impulse control disorder based on 10 criteria centering, including lying to family members to conceal
one’s involvement in gambling, gambling to escape problems, and committing crimes to continue gambling. On the
other hand, problem gambling includes those problem behaviors associated with pathological gambling, but
individuals labeled as problem gamblers show symptoms of fewer than five of the 10 DSM-IV criteria (National
Gambling Impact Study Commission, pp. 4-1 to 4-2).
(171) Howard J. Shaffer, Matthew N. Hall, and Joni Vander Bilt.
(172) Matea Gold and David Ferrell, “Going for broke,” Los Angeles Times, December 13, 1998.
(173) National Opinion Research Center, Ibid, p. viii.
(174) Patrick Armijo, “Study cites gaming problems, benefits,” Albuquerque Journal, March 19, 1999.
(175) Florida Council on Compulsive Gambling, “Helpline Statistics: July 1997 – June 1998”; and personal
communication with Florida Council on Compulsive Gambling, August 20, 1999.
(176) Lyn Bixby, “Studies follow betting addicts,” Hartford Courant, January 22, 2000.
(177) Rachel A. Volberg, Gambling and Problem Gaming in Oregon: A Report to the Oregon Gambling Addiction
Treatment Foundation, (Northampton, MA: Gemini Research, Ltd., 1998).
(178) Henry R. Lesieur, “Costs and treatment of pathological gambling,” Annals of the American Academy of
Political and Social Science “Gambling: Socioeconomic Impacts and Public Policy,” J. H. Frey, special editor),
March 1998.
(179) National Opinion Research Center at the University of Chicago, Gemini Research, and the Lewin Group, p.
49. Inflation estimates derived from CPI-U from April 1999 to March 2001, www.bls.gov.
(180) Timothy P. Ryan and Janet F. Speyrer, Gambling in Louisiana: A Benefit/Cost Analysis, prepared for the
Louisiana Gaming Control Board, April 1999, p. 83.
26.
(182) Ibid, p. 51.
(183) Timothy P. Ryan and Janet F. Speyrer, Ibid.
49.
(185) Florida Council on Compulsive Gambling, Ibid.
(186) National Research Council, Ibid, p. 5-3.
pp. 7-21.
(188) Robert Goodman, “Cannibalization: The diversion of dollars from existing businesses to gambling
enterprises,” in Legalized Gambling as a Strategy for Economic Development (University of Massachusetts –
Amherst: Center for Economic Development, March 1994), pp. 51-56.
(189) Inflation estimate computed using the annual average CPI-U for 1994 (148.2) and the March average for 2001
(176.2). Source: U.S. Department of Labor, Bureau of Labor Statistics, www.bls.gov.
pp. 7-21.
(191) “Facts about video lottery,” Argus Leader [Sioux Falls, SD], September 27, 1998, p. 5A.
pp. 7-15.
(193) “New national study shows correlation between gambling growth and the significant rise in personal
bankruptcies,” SMR Research Corporation, press release, April 6, 1999.
(194) Rachel A. Volberg, “Gambling and problem gambling in New York: A 10-year replication study, 1986-1995,”
Report to the New York Council on Problem Gambling, 1996.
(195) James R. Westphal and Jill A. Rush, “Pathological gambling in Louisiana: An epidemiological perspective,”
pp. 353-358.
(196) Richard Guzman, “Gaming: Addict’s gambling nearly killed him,” The Desert Sun (Indio, CA), March 23,
2001.
(197) See Griffin Shea and Lisa Monti, “Reasons for filings stump lawyers,” Sun Herald (Biloxi, MS), September 8,
1997.
(198) Administrative Office of the U.S. Courts, “Business and nonbusiness bankruptcy cases commenced, by
chapter of the Bankruptcy Code, during the twelve month period ended June 30, 1999.”
(199) Video poker machine supporters have tried to dismiss the influence of video gambling on bankruptcies by
citing a three-year decline in bankruptcy rates across South Dakota. In doing so, though, they ignore the 82 percent
increase in bankruptcy rates since Video poker machines were legalized in 1989. Eleven years ago, 82 percent of
bankruptcies filed in South Dakota were by businesses. By 1999, however, personal bankruptcies outnumbered
business filings 2,148 to 182—a ratio of almost 12 to one. Source: Administrative Office of the U.S. Courts,
“Business and nonbusiness bankruptcy cases commenced, by chapter of the Bankruptcy Code, during the twelve
month period ended June 30,” various years.
46.
(201) National Research Council, p. 5-4.
(202) “The 1998 Montana Gambling Study,” Report to the Governor and the 56th Legislature by the Gambling Study
Commission, Final Report, November 1998.
(203) David Strow, “Study pinpoints prevalence of problem gambling,” Las Vegas Sun, May 24, 1999.
(204) “ISU study links gambling, bankruptcy,” Telegraph-Herald [Dubuque, IA], August 5, 1998.
(205) Barry M. Horstman, “Gambling: The legal addiction,” The Cincinnati Post, March 16, 1998.
(206) Phil Rydman, “Nationwide survey: Nearly one in five at missions say gambling a factor in their
homelessness,” Press release by the International Union of Gospel Missions, March 13, 1998,
www.iugm.org/news/gambling.htm.
(207)Howard J. Shaffer, Matthew N. Hall, and Joni Vander Bilt, p. 42. Admittedly, this study did not identify
significant differences between the prevalence of problem gamblers between the early studies (1977-1993) and the
more recent ones (1994-1997). The fact that a meaningful trend or difference was not found, however, should not
be taken to mean that such a difference does not exist. The study’s chief researcher, Dr. Howard Shaffer, notes that
early gambling addiction investigators tended to focus on lifetime instead of past-year addiction rates, just as they
tended to ignore problem gamblers in favor of identifying pathological ones.(Source: Howard J. Shaffer, Harvard
Medical Center, Division of Addictions, personal communication, January 5, 2001.)
(208) According to U.S. Census data, Alabama’s March 2001 population of adults at least 21 years old was
3,101,790.
(209) Rachel A. Volberg, Gambling and Problem Gaming in Oregon: A Report to the Oregon Gambling Addiction
Treatment Foundation.
(210) National Opinion Research Center, Ibid, p. 29.
(211) J. I. Taber, R. A. McCormick, A. M. Russo, B. J. Adkins, and L. F. Ramirez, “Follow-up of pathological
gamblers after treatment,” American Journal of Psychiatry, vol. 144, no. 6, pp. 757-761. See also J. R. Cusack, K.
R. Malaney, and D. L. DePry, “Insights about pathological gamblers: ‘Chasing losses’ in spite of the consequences,”
Postgraduate Medicine, vol. 93, no. 5, 1993, pp. 169-176.
(212) M. L. Frank, D. Lester, and Arnie Wexler, “Suicidal behavior among members of Gamblers Anonymous,”
Journal of Gambling Studies, vol. 7, 1991, pp. 249-254.
(213) National Council on Problem Gambling, Problem and Pathological Gambling in America: The National
Picture, January 1997, pp. 14-15.
(214) Gerard Shields, “Commission looks at social odds of gambling,” Sun-Herald [Louisiana], July 24, 1997.
(215) Testimony of Chris Anderson, Executive Director of the Illinois Council on Compulsive Gambling, before the
National Gambling Impact Study Commission, Chicago, Illinois, May 20, 1998.
(216) Christopher Goffard, “Portrait of an addiction,” St. Petersburg Times, December 3, 2000.
(217) Susan Barbieri, “The addiction of the 90’s,” Washington Post, November 30, 1992, p. D5.
(218) M. Dickerson, C. Allcock, A. Blaszczynski, B. Nicholls, J. Williams, and R. Maddern, An Examination of the
Socio-economic Effects of Gambling on Individuals, Families, and the Community, Including Research Into the
Costs of Problem Gambling in New South Wales (Macarthur, Australia: University of Western Sydney, Australian
Gambling Institute, 1996).
(219) Ira Chinoy and Charles Babington, Ibid, p. A1.
(220) Larry Braidfoot, Gambling: A Deadly Game (Nashville, TN: Broadman Press, 1985), p. 156.
(221) Tim Mayer, “‘Crack cocaine of gambling:’ Experts believe video lottery among the most addictive forms,”
Rapid City Journal [Rapid City, SD], July 13, 1997, p. A1.
(222) J. Joseph Curran, Jr., “The house never loses and Maryland cannot win: Why casino gaming is a bad idea,”
Presented to the Joint Executive-Legislative Task Force to Study Commercial Gaming Activities in Maryland,
October 16, 1995, pp. 32-33.
(223) Valerie Lorenz and Duane E. Shuttlesworth, “The impact of pathological gambling on the spouse of the
gambler,” Journal of Community Pathology, vol. 11, 1983, p. 69.
(224) Illinois Council on Problem and Compulsive Gambling, Inc., “The need for a national policy on problem and
pathological gambling in America,” Nov. 1, 1993, p. 7.
(225) Tim Mayer, Ibid.
(226) National Opinion Research Center at the University of Chicago, Gemini Research, and the Lewin Group, pp.
48-49.
(227) Rachel A. Volberg, Gambling and Problem Gambling in Oregon: A Report to the Oregon Gambling
Addiction Treatment Foundation, Ibid.
(228) Matea Gold, Ibid.
(229) Ivan L. Zabilka, Striving after the Wind, p. 28.
(230) Matea Gold, Ibid.
(231) Ronald A. Reno, Ibid, pp. 41-43.
(232) Ed Bierschenk, “Rough odds: Less than five percent clean after a year, studies show,” Copley News Service,
September 27, 2000.
(233) Virginia Young, “Casinos fund problem gambling research; critics worry about their influence,” Post-
Dispatch (St. Louis, MO), February 10, 2000.
(234) Barry M. Horstman, “Lottery sales: Poorest buy most tickets”; and Mark D. Preston, “Leading expert tells
federal panel lotteries are a lousy bet,” States News Service, March 24, 1999.
(235) Robert Dorr, “Addicts enrich casinos, study finds–gambling is the drug,” Omaha World-Herald, June 1, 1997,
p. 1A.
(237) “Addicts keep casinos flush,” Telegraph-Herald [Dubuque, IA], June 3, 1997.
(238) Tim Novak, “When gamblers’ luck runs out,” Sun-Times [Chicago, IL], July 28, 1997.
(239) “Study finds widespread gambling in Montana,” Billings Gazette [MT], September 29, 1998.
(240) “Betting Virginia’s future on casino gambling: Gambling and crime,” Focus on the Family, 1995.
(241) National Research Council, pp. 5-3.
(242) John Mikesell and Maureen A. Pirog-Good, “State lotteries and crime: The regressive revenue producer is
linked with a crime rate higher by 3 percent,” American Journal of Economics and Sociology, January 1990, as cited
by Sandeep Mangalmurti and Robert A. Cooke, p. 13.
(243) National Opinion Research Center, Ibid, p. 29.
(244) “Betting Virginia’s future on casino gambling: Gambling and crime,” Ibid.
(245) Valerie Lorenz, “Dear God, just let me win!” Christian Social Action, July/August 1994, p. 26.
(246) Robert Goodman, The Luck Business, p. 52.
(247) “A busted flush,” The Economist, January 25, 1997, p. 28.
(249) William M. Thompson, Ricardo Gazel, and Dan Rickman, “Casinos and crime in Wisconsin: What’s the
connection?” Wisconsin Policy Research Institute Report, November 1996, p. 5.
(250) “Betting Virginia’s future on casino gambling: Gambling and crime,” Ibid.
(251) Unaudited numbers prepared by the North American Association of State & Provincial Lotteries, July 13,
1998.
(252) Fredreka Schouten, “Feds probe lotteries to see if proceeds outweigh social costs,” The Detroit News, March
15, 1998.
(254) “Betting Virginia's future on casino gambling: Casinos and crime,” Ibid.
(255) Commission on the Review of the National Policy Toward Gambling, Gambling in America, p. 156, as cited
by Sandeep Mangalmurti and Robert A. Cooke, Ibid, p. 12.
(256) Robert Martin, “State Lottery: A Bad Bet,” Issue Paper (Columbia, SC: South Carolina Policy Council
Education Foundation, July 1989), p. 1, as cited by Sandeep Mangalmurti and Robert A. Cooke, p. 12.
(258) Sandeep Mangalmurti and Robert A. Cooke, p. 12.
(259) “Betting Virginia's future on casino gambling: Casinos and crime,” Ibid.
(260) William N. Thompson, Ricardo Gazel, and Dan Rickman, Ibid, p. 3.
(261) Louisville Courier-Journal, July 23, 1993.
(262) Peter Elking, “The number crunchers,” Fortune, November 11, 1996.
(263) Joshua Kenyon, “The lottery: Gambling with the future,” March 1994.
(264) Illinois State Police, Division of Criminal Investigation, Intelligence Bureau, Ibid, p. 9.
(265) Chicago Crime Commission, Gambling Committee, Analysis of Key Issues Involved in the Proposed Chicago
Casino Gambling Project. November 19, 1992, p. 83.
(266) Joan McKinney, “Jenkins awaits action by Senate committee,” The Advocate [Baton Rouge, LA], January 9,
1997, p. 1A; Gary L. Bauer, “Gambling industry claims scalp,” Washington Update, November 18, 1996.
(268) Christopher W. Anderson, “Riverboat casinos III: The social impact,” Testimony presented to the National
Gambling Impact Study Commission, May 21, 1998.
(269) John Bartlett, Familiar Quotations (14th ed.), 1968, p. 771, no. 1.
(271) William H. Willimon, “Lottery losers,” Christian Century, January 17, 1990, p. 49.
(272) “U.S. lotteries’ fiscal 1998 ad budgets as % of sales,” LaFleur’s Lottery World 1998 Fast Facts, p. 20.
(273) Ann Carnahan, “Lottery analyzing players’ brains,” Rocky Mountain News [Denver, CO], July 8, 1997, p. 5A.
(274) Elliot Krieger, “A powerful draw? You betcha,” Journal-Bulletin [Providence, RI], May 14, 1998.
(275)Cindi Ross Scoppe, “How states sell lotteries: No studying, no work, lots of sex and money,” The State (South
Carolina), October 22, 2000, as cited by Michael Heberling, Ibid, p. 600.
(276) Ellen Perlman, “Lotto’s little luxuries,” Governing, December 1996, p. 18.
(277) Derrick DePledge, “Hype and disclosure in state lottery ads,” Philadelphia Inquirer, March 16, 1998. See
also National Gambling Impact Study Commission, Ibid, p. 3-17.
(278) National Gambling Impact Study Commission, Ibid, p. 3-16.
(279) Joseph Menn, “Lottery sales continued after top prizes gone,” Los Angeles Times, December 21, 2001.
(280) Derrick DePledge, Ibid.
(281) Howard G. Buffett, “Governments should not bet on gambling,” Kansas City Star, February 11, 1996, pp. J1,
J6.
(283) Alan J. Karcher, p. 77.
(284) Ibid, p. 79.
(285) Neal Peirce, “Lotteries are getting serious and crazy,” The Plain Dealer [Cleveland, OH], May 9, 1989, as
cited by Sandeep Mangalmurti and Robert A. Cooke, pp. 7-8.
(286) William H. Willimon, Ibid, p. 49.
(287) Neal Peirce, Ibid.
(288) Charles T. Clotfelter and Philip J. Cook, Ibid.
(289) Bill Estep and Chris Poore, Ibid.
(290) Ibid.
(291) Frank York, “State lotteries: The marijuana of problem gambling,” North Carolina Family Policy Council
Findings, June 1998, p. 2.
(292) Derrick DePledge, “Hype and disclosure in state lottery ads.”
(293) Charles Babington and Ira Chinoy, “Lotteries lure players with slick marketing,” Washington Post, May 4,
1998, p. A1.
(294) Keith Mulvihill, “Many problem gamblers say ads trigger urge to bet,” Reuters, January 10, 2002.
(295) John W. Kindt, “Legalized gambling activities: The issues involving market saturation,” p. 281.
(297) Lois Gould, “Ticket to Trouble,” New York Times Magazine, April 23, 1995, p. 40.
(298) Barry M. Horstman, “Lotteries are hot, but odds make them a sucker bet,” Cincinnati Post, September 17,
1997.
(299) Mark Thornton, The Economic Benefits of an Alabama State Lottery.
(300) Ashley Barron and Nichole Monroe Bell, “Winners buy more tickets,” Charlotte Observer, January 9, 2002.
(301) “Ohio lottery halts sales of 2000 numbers to prevent huge payout,” Las Vegas Sun, January 2, 2000.
(302) Fredreka Schouten, “Some state lotteries hedge payouts,” Detroit News, May 3, 1998.
(303) Barry M. Horstman, “Lotteries are hot, but odds make them a sucker bet.”
(304) Gail Biby, “Gambling's high cost,” North Dakota Family Association Citizen, November 1995, p. 3.
(305) George Will, “In the grip of gambling,” Newsweek, May 8, 1989, p. 78.
(307) Herbert Kahn, “State lotteries: The only legal swindle,” Wall Street Journal, June 14, 1984, as cited by
Sandeep Mangalmurti and Robert A. Cooke, p. 10.
(308) Jeff Perlee, “Should lotteries advertise?” Paper delivered to the NASPL Directors’ Conference, Wilmington,
DE, May 1997.
(309) For an example of a lump-sum payment lottery, see Pat Doyle, “Powerball changes now allow lump-sum
payment,” Star Tribune [Minneapolis, MN], November 25, 1997.
(310) Ivan L. Zabilka, Striving After the Wind, p. 34; see also Lois Gould, Ibid, pp. 38-41, 54, 89-90.
(311) Charles Clotfelter, Philip Cook, Julie Edell and Marian Moore, State Lotteries at the Turn of the Century:
Report to the National Gambling Commission (Raleigh, NC: Duke University), April 23, 1999, as cited by Michael
Heberling, Ibid, pp. 603-604.
(312) Paul Tharp, “Lottery raises issue of cents and sensibility,” New York Post, November 15, 1997.
(313) Lois Gould, Ibid, p. 40.
P.O. Box 59468
Birmingham, AL 35259
205/870-9900
http://www.alabamapolicyinstitute.org
info@alabamapolicy.org

Theft by Consent Alabama Lottery

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Theft by Consent Alabama Lottery

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An Alabama Lottery:

Founding Principles In Action

Alabama’s Lottery: Theft By Consent

Copyright August 2002 by the Alabama Policy Institute, Birmingham, Alabama

Permission to reprint in whole or in part is hereby granted, provided that the

For additional copies, please contact:

otteries are the most-played form of legalized gambling in the U.S.

L In 1998, 51.8 percent of Americans—100 million adults—played

As recently as 1963, lotteries were banned in every state in America.9

The lure of "revenue from nowhere" that accompanies the effort to

But, a study produced by Dr. Mark Thornton, Professor of Economics

I. The Lottery and Education

In reality, the billions of lottery dollars earmarked for education do not

Thus, instead of helping, lotteries can hurt education funding in the

The experiences of other states show the presence of a lottery is a

For many states that adopt low-stakes legalized gambling activities

In South Dakota, the transformation was even faster. In 1987, a state

III. The Lottery and Economics

B. The Lottery and Interstate Gambling

Because no state lottery keeps records of lottery players or their

Alabamians spend even less on the Florida Lottery. From 1997 to

Likewise, Alabamians comprise a relatively small percentage of

If spending patterns among patrons are assumed to be equal, it is prob-

The Commission's figures do not include revenues from the Choctaw-

If gambling supporters are concerned about retaining some of the mil-

C. The Lottery as a Long-Term Revenue Generator

Georgia, or Mississippi, it is an admission that it is Alabamians the gam-

The short-lived infusion of lottery dollars almost always results in prof-

1. Little Room for Growth

!Chris Lyons, director of the Oregon Lottery, notes: "There is no question

In response to fading sales, lotteries have increased the number and

!Lottery ticket sales in Wisconsin have dropped 23 percent—$117.5 mil-

actually declined by $100 million from 1999 to 2001.61

As for convenience, the pervasiveness of mobile Internet-enabled

4. New Games and More Gambling

Lotteries, racetracks and other pari-mutuel businesses might tap

In order for lotteries to survive, they must cannibalize the economy,

Storeowners in California have also experienced a decrease in food

If lottery revenues were immediately reintroduced into the economy,

Likewise, William Duncombe, associate professor of public adminis-

IV. The Lottery and Its Victims

the poor, minorities, underage gamblers and senior citizens.

The response of lottery supporters regarding regressivity is not con-

Finally, the poor spend more on lottery tickets on an absolute scale.

!In Massachusetts, individuals in the poorer cities of Worcester and

Chelsea spent an average of $336 and $445, respectively, on lottery tickets

Another common method of inferring whether members of particular

!Research recently published the Cincinnati Enquirer found that sales of

!Seventy-nine percent of the money spent on lottery tickets in 1997 in

B. The Lottery: Choice of the Poorest Gamblers

!In Wisconsin, an Associated Press survey found that residents living in

!In Virginia, four in 10 "heavy" players—those who spend an average of

Pediatric literature notes that teenagers are particularly susceptible to

While considerable disagreement surrounds the exact number of ado-

are already addicted to gambling, according to a 1997 report by the

!An August 1999 report by the American Academy of Pediatrics estimates

Research at the state level supports these claims:

!In 1997, researchers at Louisiana State University-Shreveport surveyed

!Ninety percent of Indiana's teenagers have gambled at some point in their

!A March 1998 survey by the New York Council on Problem Gambling of

their peers. Two-thirds of the hard-core gamblers in detention admitted

stealing to finance their gambling.144

The emotional damage to adolescents with gambling problems can also